Money Laundering:

Rapid Growth of Casinos Makes Them Vulnerable

GGD-96-28: Published: Jan 4, 1996. Publicly Released: Feb 14, 1996.

Additional Materials:

Contact:

Norman J. Rabkin
(202) 512-3610
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO examined: (1) the extent of legalized gaming in the United States; (2) currency transaction reporting requirements for casinos; (3) whether the same transaction reporting requirements apply to tribal casinos; and (4) the Internal Revenue Service's (IRS) efforts to ensure that casinos are complying with currency transaction reporting requirements.

GAO found that: (1) 48 states permit some form of legalized gaming, including riverboat casino gaming and Indian gaming; (2) the amount of cash wagered annually in casinos has grown from $117 billion in 1984 to $407 billion in 1994; (3) the Bank Secrecy Act (BSA) requires casinos to report currency transactions over $10,000, obtain additional identifying information about customers opening a line of credit, and develop BSA compliance programs that meet certain requirements; (4) although Nevada casinos report customers that purchase chips in cash amounts over $10,000, they do not report customer identification information on verified winnings over $10,000 or cash exchanges involving small denomination bills over $2,500; (5) tribal casinos are not subject to BSA, but they must report currency transactions in accordance with the Internal Revenue Code (IRC) provision regarding cash received in a trade or business; (6) IRS has made efforts to educate tribal casino officials on IRC reporting requirements to ensure that they are complying with federal regulations; (7) IRS needs to use its enforcement resources to complete compliance reviews of other nonbank financial institutions and to ensure that individuals and businesses are complying with tax laws; and (8) new BSA regulations will relieve some of the pressure on IRS by requiring casinos to take a more active role in ensuring their own compliance with BSA.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: FinCEN believes that it would be difficult or impossible, to set standards at the federal level that would determine which cash transactions to allow and what dollar thresholds should be established. Treasury believes that the most effective means of combating money laundering is determining which cash transactions should be recorded or reported and working with the industry to ensure that suspicious activity, regardless of the form of the funds involved, is effectively detected and reported. FinCEN believes that prohibiting certain transactions is not a solution to combating money laundering, but reporting suspicious activity may help to detect money laundering in casinos. FinCEN is writing a proposed amendment to the Bank Secrecy Act regulations requiring casinos to report suspicious transactions. Therefore, the action taken by Treasury is not fully responsive to the recommendation to consider the costs and benefits of an amendment to BSA.

    Recommendation: The Secretary of the Treasury should consider the costs and benefits of an amendment to BSA to allow for the prohibition, as Nevada does, of certain cash transactions in casinos that may lend themselves to money laundering.

    Agency Affected: Department of the Treasury

 

Explore the full database of GAO's Open Recommendations »

Sep 21, 2016

Aug 3, 2016

Aug 1, 2016

Jul 14, 2016

Jul 5, 2016

Jun 30, 2016

Jun 28, 2016

Jun 23, 2016

Jun 22, 2016

Looking for more? Browse all our products here