The U.S. Treasury is telling casinos to do more to stop criminals from using their sports books to launder money in its latest warning to the industry to bolster compliance programs.
The Treasury’s Financial Crimes Enforcement Network along with law enforcement and regulators have noted that criminals are increasingly placing bets with casino sports books through intermediaries, concealing the origin of their funds and posing money-laundering risks, according to a letter FinCEN wrote to an industry trade group.
FinCEN called on casinos to identify third parties on whose behalf sports bets are being placed and to file suspicious activity reports as needed or risk civil and criminal penalties, according to the letter addressed to the American Gaming Association’s chief executive and meant to clear up any “misperception” about casinos’ obligations.
The letter, dated Dec. 24 and made public on FinCEN’s website on Friday, was written ahead of college football and National Football League playoff seasons, which both attract heavy betting activity. It also follows repeated calls from FinCEN for casinos to improve compliance standards and the AGA’s December release of its first set of anti-money-laundering best practices guidelines, developed with FinCEN.
While the AGA said it welcomes FinCEN’s guidance on sports betting, “the risk of money laundering is far greater in the vast, unregulated, illegal sports betting market than in the highly regulated, legal gaming industry,” the group said in a Friday statement on its website.
Though sports betting is widely prohibited in the U.S. outside of Nevada, some estimate nearly $400 billion is illegally wagered on sports each year in the country, wrote National Basketball Association Commissioner Adam Silver in a November op-ed in the New York Times calling on Congress to adopt a federal framework to allow states to permit sports betting. He said that though the NBA and other sports leagues have opposed the expansion of sports betting in the U.S. for more than two decades, it is better to regulate the industry than to let it flourish underground. In New Jersey, state officials are battling the federal government over a proposal to allow sports betting there.
Law enforcement has been focusing on sport betting violations for some time, said FinCEN in the letter, highlighting a 2012 bust of a bookmaking operation associated with a major organized crime group that had connections to Las Vegas sports books. FinCEN has also noted “numerous instances” in which casino sports books failed in currency transaction reports to identify the actual people on whose behalf intermediaries were placing bets, the letter said.
The Wall Street Journal in November reported that prosecutors from the Manhattan and Las Vegas U.S. Attorney’s offices and investigators from the Internal Revenue Service and the Drug Enforcement Administration were coordinating their efforts to look into whether casino operator Wynn Resorts Ltd. violated money-laundering laws, including through its handling of sports-betting activities, according to people familiar with the matter. A Wynn spokesman on Tuesday said, “We have received no information, nor have any indication, that any such investigation of the company is taking place.”
In a continuing federal case being tried in a Nevada court, the Federal Bureau of Investigation has highlighted connections among sports betting and two other lucrative gambling worlds—Macau high-roller junkets and high-stakes poker. U.S. regulators and an international sports watchdog say the combination is worrisome, given alleged organized-crime links and money-laundering risks in all three areas.
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