GGRAsia – U.S. slaps US$75 mln penalty on Pacific casino over AML

U.S. slaps US$75 mln penalty on Pacific casino over AML

Jun 04, 2015 Newsdesk Latest News, Top of the deck, World

The U.S. Treasury’s Financial Crimes Enforcement Network – known as FinCEN – on Wednesday announced it had assessed a US$75 million civil financial penalty against the operators of Tinian Dynasty Hotel and Casino, in the Commonwealth of the Northern Mariana Islands (CNMI).

FinCEN said the assessment against the property’s operator Hong Kong Entertainment (Overseas) Investments Ltd, was for “wilful and egregious violations” of the U.S. Bank Secrecy Act.

The announcement comes only days after Northern Mariana Islands Chief Judge Ramona V. Manglona ruled that the U.S. Treasury had the authority to regulate casinos on the Pacific archipelago, which is a U.S. territory with commonwealth status similar to that of Puerto Rico.

Hong Kong Entertainment had moved to dismiss a federal indictment against it containing 158 charges, including 155 allegations of failing to submit currency transaction reports (CTRs). Such reports are required under U.S. law for financial transactions above a US$10,000 threshold. Lawyers for the casino operator had argued the U.S. Congress had not given the U.S. Treasury the authority to regulate casinos in the CNMI.

But in FinCEN’s announcement of regulatory action, FinCEN director Jennifer Shasky Calvery was scathing of what she said was the casino operator’s lack of an adequate anti-money laundering (AML) policy.

“Tinian Dynasty didn’t just fail to file a few reports… The casino operated for years without an AML programme in place. It failed to file thousands of CTRs and its management wilfully facilitated suspicious transactions and even provided helpful hints for skirting and avoiding the laws in the U.S. and overseas. Tinian Dynasty’s actions presented a real threat to the financial integrity of the region and the U.S. financial system,” Ms Shasky Calvery added.

The FinCEN announcement further stated: “No member of Tinian Dynasty staff was delegated responsibility for day-to-day compliance with the BSA [Bank Secrecy Act]… Further, casino personnel were not trained in BSA record keeping requirements or in identifying, monitoring, and reporting suspicious activity.”

The enforcement body also accused some Tinian Dynasty staff of – in some cases – colluding with patrons that wished to conduct financial transactions with large amounts of cash without reporting those transactions.

“During a criminal investigation, undercover agents, posing as customers, told casino staff that they planned to gamble large amounts of money and requested that the casino not report their transactions to the government. In another interaction, the casino’s VIP manager assured an undercover agent, posing as a representative of a Russian businessman, that his client could bring large amounts of currency, and the casino would not file reports relating to these transactions,” said FinCEN.

It added: “Instead of reporting the transactions as suspicious, Tinian Dynasty accommodated these requests. And, in some instances, casino employees provided detailed instructions on how these patrons could conduct transactions without being reported or attracting law enforcement scrutiny.”

During a 2013 search of Tinian Dynasty, law enforcement agents discovered a stack of more than 2,000 unfiled CTRs, said the enforcement agency.

“When asked about these CTRs, the casino’s chief auditor said that he assumed that filing them was a low priority because nobody ever noticed that they were not being filed,” said FinCEN.

GGRAsia has approached Tinian Dynasty for comment on the FinCEN assessment, but had not received a reply by the time the story went online.