The Financial Crimes Enforcement Network ("FinCEN") rescinded and replaced a November 2017 Assessment against a California-based casino for anti-money laundering ("AML") violations, reducing the initial fine against the casino in exchange for the casino's commitment to improve its AML compliance and other conditions.
As previously covered, FinCEN issued an $8 million fine against Artichoke Joe's Casino ("AJC") for failing to implement and maintain an effective AML program and for failing to detect and report suspicious activity. As described in the November 2017 Order, AJC failed to file suspicious activity reports when the casino knew about transactions involving loan-sharking and other criminal activity.
According to the revised Order, FinCEN will suspend $3 million of the initial $8 million fine if AJC (i) hires an independent monitor for two years, (ii) hires an AML compliance officer, (iii) updates its AML policies and procedures to address money-laundering risks that are specific to casinos, (iv) conducts a transactional lookback, and (v) certifies its compliance with the above.
Commentary / Christian Larson
It is unusual for FinCEN to rescind an assessment. The typical practice is for a regulated entity to negotiate and settle with FinCEN before FinCEN issues an assessment. The resulting settlement document usually comprises both an assessment and consent order. Here, FinCEN and AJC settled after FinCEN issued an assessment in November 2017. The new assessment rescinds the old assessment and includes AJC's consent to a reduced penalty and accompanying compliance conditions. FinCEN has made this unusual move quietly; it has not issued a press release to promote the deal it struck with AJC. FinCEN reduced the initial fine by $3 million in exchange for the involvement of an independent monitor. The casino appears to have calculated that the cost of a monitor will be less than $3 million while FinCEN likely welcomes the involvement of an independent third party.
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