Kenneth A. Blanco, the director of the Financial Crimes Enforcement Network (FinCEN), has urged casinos to follow the agency’s guidelines in regards to suspicious convertible virtual currency (CVC) activity.
During his speech at the 12th Annual Las Vegas Anti-Money Laundering Conference on Aug. 13, Blanco addressed casinos’ compliance with the FinCEN’s guidance released in May. In their guidance, the FinCEN considered certain business models involving CVC financial institutions to help them comply with their existing obligations under the Bank Secrecy Act (BSA). The guidance, however, did not establish any new regulatory expectations or requirements.
A gap in reporting
Blanco specified two areas where CVC intersects with casinos and card clubs, which are online CVC casinos as well as physical casinos and card clubs that accept CVC for gaming. Blanco noted that casinos dealing with cryptocurrencies should consider how they will conduct due diligence on CVC transactions and blockchain analytics and how they will incorporate CVC-related indicators into their SAR filings.
Blanco stressed that a gap in reporting by casinos remains an area of concern, explaining:
“I encourage casinos to closely review both documents on FinCEN’s website to see how we are addressing this industry and its interactions with others in the financial sector. Casinos should be filing SARs when they encounter suspicious CVC activity and any cyber events that affect, facilitate, or conduct transactions. We know that casinos are targets for cyber and cyber-enabled criminal activity such as ransomware attacks and business e-mail compromise schemes.”
International level concerns
In June, a United Kingdom crypto advocacy center advised looking to the FinCEN’s interpretive guidance in regard to the BSA and crypto assets as a benchmark for Her Majesty’s Treasury. The interpretation only brings individuals who have independent control over another person’s crypto assets under the purview of the BSA, excluding those who merely enable exchange or transmission — for example, open-source software developers, multiple-signature service providers, and decentralized exchange facilitators.
Last month, United States Treasury Secretary Steven Mnuchin shared President Donald Trump’s concerns on the use of cryptocurrency to finance illicit activity, and stressed the role of enforcing FinCEN regulations with respect to crypto-dealing organizations.