The Financial Crimes Enforcement Network this week announced its first settlement with, and assessment against, a “card club” gaming establishment for violations of the Bank Secrecy Act (BSA). The settlement and FinCEN’s assessment requires Oaks Card Club to pay a fine of $650,000 for willful violations of the BSA.
Like casinos, card clubs are defined as financial institutions under the BSA and are subject to FinCEN’s rules. Among its failures, Oaks relied on an inaccurate and misleading anti-money laundering (AML) policy to train its staff. The AML policy failed to provide instructions, or provided wrong instructions, concerning the card club’s BSA obligations and filing of BSA reports, according to FinCEN.
For example, FinCEN said, Oaks encouraged employees to provide notice to patrons if they were about to conduct a cash transaction that would put them over the $10,000 threshold for the filing of a Currency Transaction Report, thereby possibly encouraging structured transactions. The policy also lacked instructions on when an employee should file a Suspicious Activity Report (SAR). The Oaks filed no SARs in 2009 and 2010.
The U.S. Attorney for the Northern District of California brought criminal charges against several Oaks employees and patrons after a March 2011 raid by state and federal law enforcement. Despite this, Oaks failed to file any SARs related to the criminal activity on its premises, including making illegal loans and racketeering.
“Oaks Card Club has been in business since 1896, and had been subject to the Bank Secrecy Act for quite some time,” FinCEN Director Jennifer Shasky Calvery said in a statement. “That should have allowed enough time to become very familiar with what’s right and what’s wrong. As we often see, these penalties could have been avoided through even minimal attention to their anti-money laundering requirements.”