Nevada casino fined $1M for willful BSA/AML violations
The Financial Crimes Enforcement Network (FinCEN) has announced a $1 million civil money penalty against Sparks Nugget, Inc. d/b/a John Ascuaga’s Nugget, of Sparks, Nevada. Sparks Nugget admitted that it willfully violated the anti-money laundering (AML) provisions of the Bank Secrecy Act (BSA). Sparks Nugget was reported to have egregiously and willfully violated AML program requirements, reporting obligations, and recordkeeping requirements. According to FinCEN's release, Sparks disregarded its compliance manager. It chose not to file rightfully prepared Suspicious Activity Reports (SARs) and it instructed her to not interact with the Internal Revenue Service’s BSA auditors and prevented her from reviewing a copy of the completed exam report.
Sparks Nugget also committed hundreds of recordkeeping violations, and failed to report several Currency Transaction Reports (CTRs) as well as SARs. The management committee Sparks Nugget established to determine whether to file SARs never held a single meeting, and some committee members were unaware that they were even on the committee. Sparks Nugget lacked any mechanism to document or otherwise account for decisions not to file SARs, and its day-to-day managers maintained that no suspicious activity ever transpired in the millions of dollars of transactions that occurred at the casino.
FinCEN reported that Sparks Nugget harnessed its software systems and its own employees to gather large amounts of information about its customers. The casino used this information to improve profits, to provide more personalized customer service, and to minimize the casino’s business risk. Despite this, and despite the requirements of the BSA, Sparks Nugget willfully failed to use this same information to fulfill its AML obligations under the law.
In the Order for the civil money penalty, FinCEN states, "During the 2010 IRS examination, Sparks Nugget employees told the IRS that they did not need to monitor for suspicious activity because nothing suspicious ever happened at the Casino. This comment is remarkable in light of the fact that a few years before the examination, a county official was arrested for and later convicted of embezzling at least $2.2 million, and gambling half of that at the Casino. Sparks Nugget did not file a SAR on any of those transactions, even after the arrest became public. In 2006, in another example of suspicious activity, the Casino’s former general counsel was arrested for (and later pled guilty to) embezzling about $3 million from Sparks; the Casino had dismissed the attorney, but did not file a SAR.
"When an employee did spot potentially suspicious activity and reported this information to the SAR Committee, a group of operational and financial managers tasked with the responsibility to determine whether or not potentially suspicious activity should be reported by filing a SAR, the employee was met with silence. The SAR Committee, in fact, never held a single meeting. Moreover, some of the members were not even aware that they were on the Committee."