FinCEN Director Reminds Casinos of Crypto Compliance Requirements

FinCEN director Kenneth Blanco said that suspicious activity reports detailing crypto fraud is a matter of national security.

Aug 16, 2019 at 6:30 p.m. UTC
Updated Sep 13, 2021 at 11:20 a.m. UTC

The director of the Financial Crimes Enforcement Network (FinCEN) said the casino industry needs to up the ante on reporting suspicious activities related to digital currencies.

Speaking at an Anti-Money Laundering Conference in Las Vegas on August 13, FinCEN director Kenneth Blanco said the agency has not received the amount of suspicious activity reports (SARs) expected.

“There is a misconception that just because FinCEN has not publicly issued enforcement action against a casino or card club since last year that FinCEN is not looking at this financial sector,” Blanco said. “Let me assure you, this is not the case.”

According to regulatory guidelines published in May, casinos and card tables are required to identify and report “red flags” that point to potential instances of money laundering, sanctions evasion, and other illicit financing purposes” using cryptocurrencies.

This is in light of casinos being targets for malware scams and "business e-mail compromise schemes."

“Casinos should be filing SARs (suspicious activity reports) when they encounter suspicious [convertible virtual currency] activity and any cyber events that affect, facilitate, or conduct transactions,” he said.

Additionally, casinos must set policies, procedures, internal controls, and risk assessments related to crypto assets.

Blanco raised several questions related to due diligence:

“How will you conduct blockchain analytics to determine the source of the CVC? How will you incorporate CVC-related indicators into your SAR filings as appropriate?”

Blanco further drew a distinction between registered casinos or card tables and online gaming sites that function as money transmitters. Licensed casinos, online or offline, must comply with the Bank Secrecy Act (BSA) and any laws related to money services businesses, and later called compliance “a national security issue.”

“We know the kind of significant information that casinos are able to develop on gaming customers. This information is extraordinary and relevant,” he said.

Kenneth hopes that casinos will create a “culture of compliance” where distinct entities share information among themselves and with the proper authorities.

Chips, poker, gambling photo via Shutterstock

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