Money LaunderingRapid Growth of Casinos Makes Them Vulnerable Gao ID: GGD-96-28 January 4, 1996
The volume of cash wagered in a growing number of casinos around the country, coupled with uneven enforcement of currency-transaction- reporting requirements for casinos, makes these businesses vulnerable to persons attempting to launder profits from illegal activities. This report discusses (1) the extent of legalized gambling in the United States, especially that taking place in casinos; (2) the currency-transaction-reporting requirements for casinos; (3) whether the same reporting requirements apply to tribal casinos; and (4) the level of enforcement efforts to ensure that casinos comply with currency-transaction-reporting requirements. This report also provides information on new legislation and recent changes to existing federal regulations that will affect currency transaction reporting for casinos.
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.Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.Director: Team: Phone: