Las Vegas Casinos Hesitant to Provide High Roller Customer Details to FinCEN

An ongoing debate continues about whether land-based Nevada casinos should provide customer details to the U.S. Department of Justice’s Financial Crimes Enforcement Network or “FinCEN” division. FinCEN wants the player information in an attempt to eliminate money laundering through gambling activities. Las Vegas casinos say such releases would damage their credibility with their high stakes gamblers and damage their business.

The Treasury Department is seeking to enforce Article 31 of the Bank Secrecy Act, which was enacted over 10 years ago. Their bureaucrats say the Las Vegas Strip casinos are years behind other financial institutions in handing over their data and customer lists. Fred Curry, a partner with Deloitte Financial Advisory Services, says it is only “a matter of time” before such information is going to be handed over.

“Integrity Goes a Long Way”, Says Shasky Calvery

Recently, FinCEN Director Jennifer Shasky Calvery spoke at the Global Gaming Expo in Las Vegas. Shasky Calvery told the assembled audience at the Global Gaming Expo that transparency was important in a business endeavor. She was quoted saying, “every financial institution, casinos included, should be concerned about its reputation.”

To emphasize her point, the FinCEN Director added, “Integrity goes a long way.”

Privacy Concerns Could Hurt Vegas Strip Businesses

Las Vegas Strip executives have a much different perspective on the release of such information. The casinos rely on high stakes gamblers, called premium players and “whales”, for much of their revenue. These gamblers spend so much money that their winnings (or losses) often affect monthly and quarterly reports, and some have been known to be added as an item in itemized financial reports of these institutions.

If these high dollar gamblers realize their financial information is going to be released to the Justice Department, this means their vacation trips might become the subject of federal investigations and audits. In such circumstances, these high rollers have the money, means, and motive to avoid such inquiries altogether–they have the resources to go outside the country to gamble.

Such gamblers might not have sinister motives for avoiding federal oversight. Many might prefer to avoid such audits based on basic privacy concerns. It is an aphorism that you do not want to come to the attention of federal financial authorities, because it is not easy for even the most well-meaning citizens to stand up to that kind of scrutiny. Faced with such scrutiny, many might prefer to take their casino bankroll outside of the United States.

Las Vegas Needs Its High Rollers

The Las Vegas Strip casinos are always amidst a downturn at the moment. The recession has caused many middle class gamblers to stay home instead of make expensive trips to Sin City. This means that the high stakes betters are more important to the Vegas economy than ever.

Nevada casinos also have to deal with more competition abroad than they did even 10 years ago. Because of challenges from Macau, Singapore, and other Asian gaming destinations, the casinos continue to see the revenues decline in Las Vegas. Already, Macau in China has become the world’s gambling capital. If more high rollers leave the Vegas Strip, some of those casinos could begin to have the problems that the Atlantic City casinos are having.

Zhenli Ye Gon Money Laundering Case

Still, the Justice Department’s FinCEN agency insists money laundering is a legitimate concern. The feds point to the Zhenli Ye Gon case as an example of the activity they want to crack down on.

Zhenli Ye Gon is a Mexican-Chinese businessman who was arrested in 2007 for international drug trafficking. He wagered $84 million at the Las Vegas Sands casino, which launched an investigation by the Justice Department. Eventually, LSV paid $47 million in fines after it admitted they did not scrutinize Zhenli Ye Gon’s activities closely enough under Title 31 regulations.

The law states that transactions of more than $10,000 in a 24-hour period require the completion of a Currency Transaction Report. The Currency Transaction Report must provide enough information to identify the person involved in the transaction.

“Cost Casinos a Great Deal”

Ken Adams of the Reno-based CDC Gaming Reports says FinCEN’s insistence on more transparency is going to change how brick-and-mortar casinos do business in the future.

In fact, Adams says the crackdown on money laundering already has altered the face of casino gambling in America. Ken Adams added the federal government “has cast an eye upon the casino industry, it has cost casinos a great deal.“