In casinos, usually, large sums of money are transacted through gaming tables, slot machines, retail operations, and ATM kiosks (or ticket redemption machines). The Bank Secrecy Act was first implemented on financial institutions, but criminal and illegal activities in casinos created a need for creating additional regulations, specific to casinos.
According to recent laws, casinos in the US that generate over $1,000,000 annual revenues are required to report certain transactions to the Financial Crimes Enforcement Network (FinCEN). The reason is to assist the FinCEN in discovering illegal activities, such as money laundering, terrorist financing, and other financial crimes.
What is Title 31?
Title 31 refers to 31 CFR Chapter 10 of the Financial Crimes Enforcement Network (FinCEN). It is a codified regulation that enforces the Bank Secrecy Act. The director of FinCEN is responsible for enforcing compliance with the Bank Secrecy Act. Mostly associated with the Casino and Gaming Industry, Title 31 requires Casino owners to record and report the identity of individual patrons who make transactions of more than $10,000.
Casino & Gaming Industry Compliance for Casinos Card Clubs
Title 31 was adopted to acknowledge that casino owners use banking service. In addition, banking is one of the most regulated industries in the world. Therefore, the illegal use of banking services creates a need for additional regulations, which were specific to the casino and gaming industry.
Title 31 Requirements & Compliance for Casinos and Card Clubs
If your casino or card club generates gross annual gaming revenue (GARA) more than 1 million dollars, you will be required to comply with the casino with Title 31 requirements. In case your casino has a GARA that is less than 1 million dollars, you will not be required to comply with your casino or card club with Title 31 regulations.
Title 31 requirements are:
• Casino owners are required to file and keep records of all the transactions- Currency Transaction Reports (CTRs). Besides, it is obligatory for them to keep records of Suspicious Activity Reports (SARs).
• CTR-FinCEN Form 112- needs to be filled out and filed electronically via Bank Secrecy Act filing system by casinos and all financial institutions, whenever there’s a transaction of more than $10,000.
• SAR- FinCEN Form 111- needs to be filled out and filed through BSA E-filing system by casinos and all financial institutions, whenever more than $5,000 transactions are made that are deemed suspicious.
• It’s required to create and implement a written Anti-Money Laundering (AML) program, which is used to assess terrorist financing and money laundering assumed by card club or casino to prevent risks.
Does Title 31 Affect your Casino Business?
Businesses licensed by the IRS as either card club or casino and have gross annual gaming revenues (GAGR) more than 1 million dollars are required to comply with Title 31 regulations. There is an exception for the casinos located in Nevada; casino owners that have GAGA more than $10,000,000 need to comply with Title 31.
Title 31 Noncompliance Consequences
In case you do not file a required report or comply with the requirements of Title 31, you will subject to:
• Criminal penalties up to $250,000, imprisonment up to 5 years (of any director, partner, employee, or officer, participated in the violation purposely).
• Criminal penalties up to $500,000, imprisonment up to 5 years (of any director, partner, employee, or officer, participated in the violation purposely), if the violation is committed while breaching another law or performing any illegal activity involving $100,000 or more in 12 months.
• Civil penalties up to $500 for each negligent violation
• Civil penalties up to $50,000 for combined negligent violation
• If you fail to develop AML program, you will subject to pay $25,000 penalty for each day until violation continues.
The Main Takeaway
Considering the safe and secure transactions in casino and card clubs, it is crucial for you to comply with the Title 31 regulations.
FinCEN announced a final rule that exempts casinos from the requirement to file CTRCs on jackpots from slot machines and video lottery terminals. The final rule also exempts reportable transactions in currency, under certain conditions, involving certain money plays and bills inserted into electronic gaming devices.