FinCEN Says Crypto Friendly Casinos Should Do More To Counter Money Laundering

FinCEN Says Crypto Friendly Casinos Should Do More To Counter Money Laundering August 19, 2019 August 19, 2019 Paul Butcher
 General August 19, 2019 by Paul Butcher
Financial Crimes Enforcement Network

The online casino industry is growing at rapid rate across the world and money laundering continues to be one of the biggest concerns hampering the industry. Kenneth Blanco, the director of the Financial Crimes Enforcement Network (FinCEN) highlighted a number of these concerns at the recent anti-money laundering conference in Las Vegas.

Blanco pointed out that the casino industry needed to step up when it comes to reporting crimes involving cryptocurrencies. According to Blanco, FinCEN has not received the expected amount of suspicious activity reports (SARs) from the gambling industry.

Blanco said that it may seem that FinCEN is not paying close attention to the casino industry because it has not taken any significant steps against casino operators. However, FinCEN is keeping a close watch on the sector and the latest regulatory guidelines published in May clearly stipulate the responsibility of casino operators. 

Casino operators need to identify and report incidents that may indicate that cryptocurrencies were used in money laundering and other illegal financial operations. Blanco wants casinos to be more pro-active in filing suspicious activity reports (SARs) whenever they come across cryptocurrency activities that seem shady.

Additionally, with casinos being a top target for malware and other cyber related scams, casino operators are encouraged to be extra careful with their internal policies and risk assessments when it comes to crypto assets.

Cryptocurrency Friendly Casinos – A Concern

When it comes to the casino industry, cryptocurrencies are classed as convertible virtual currencies (CVCs). This means that these assets can be easily converted from digital into real currency. The rise of CVC casinos, where wagers are done in crypto and other digital assets is something that FinCEN is concerned about.   

The director points out that according to regulations, online gaming sites that are not licensed to operate as casinos in the United States are technically not “casinos” under regulations. They are operating as money transmitters. All money transmitters need to comply with the Bank Security Act (BSA) and any laws that cover money services. One of these requirements is to register with FinCEN. This applies to all domestic money transmitters and foreign-based ones that target US citizens. 

To ensure proper compliance, Blanco suggests that any casino that accepts CVC from customers either online or on-site needs to have clear policies and procedures on how to handle them. Proper risk assessments should also be done on a regular basis. Important questions need to be asked when it comes to ensuring compliance. This includes how the casino will carry out blockchain analytics on any crypto asset that it receives and how it will report suspicious crypto activity in its SARs filings.

Paul ButcherAuthor

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