Las Vegas Sun

March 29, 2024

Terrorism worries may lead to casino changes

Heightened concerns about money laundering for terrorist purposes will likely lead the federal government to shift authority over federal cash reporting rules from state regulators to the U.S. Department of the Treasury, a Washington, D.C.-area attorney told a group of security and marketing officials at an anti-terrorism conference Tuesday.

Nevada casinos are now required to report all cash transactions of $10,000 or more to the federal government. But the state Gaming Control Board has authority over the process, which is aimed at combating money laundering. Nevada is the only state with an exemption to federal anti-money laundering procedures that apply to casinos in other states.

The shift to federal oversight also is a recognition that "banks have done a good job implementing money-laundering procedures," international trade law expert Douglas Jacobson said at a Las Vegas conference sponsored by Washington, D.C.-based Homeland Education Resource Organization.

Criminals seeking a path of least resistance have in some cases shifted their activities from banks to casinos, Jacobson said.

Nevada regulators and gaming bosses maintain that casinos -- with restrictions on money transfers -- are inefficient places for criminals to launder money as compared to banks, which are accustomed to handling larger sums.

But experts have acknowledged that new efforts to fight terrorism may lead the Treasury Department to usurp regulatory control from the Gaming Control Board.

That transfer of power could have significant implications for area casinos in terms of penalties for non-compliance and mitigation opportunities, Jacobson said.

"The U.S. government likes to send strong messages" about non-compliance, he said, such as when it fined Mississippi casinos $7 million for failing to file cash transaction reports with the federal government. That was more than the $5 million settlement proposed by the state Gaming Control Board to resolve an investigation at the Mirage that uncovered thousands of unfiled reports, he said.

Disputes would be easier to resolve with state regulators who are familiar with the industry, he added.

Federal control over another aspect of casino cash reporting already shifted from the state gaming board to the Treasury Department.

On March 25, Nevada casinos began complying with so-called "suspicious activity" reporting requirements required of all banks and other financial institutions as part of President George W. Bush's Patriot Act, a post-Sept. 11 measure aimed at fighting terrorism.

Nevada has operated under its own set of rules, requiring casinos to report suspicious transactions to Gaming Control Board authorities, since 1997.

The so-called SARs rule has stimulated more interest in casino activities by federal authorities, who can be expected to put cash reports through a computer model to determine transaction patterns and conduct undercover sting operations, he said.

The new requirements have irked Nevada casinos because they allow federal authorities to second-guess casino operators, he said.

Nevada law requires casinos to report financial transactions if the casino "knows, or in the judgment of its employees, has reason to suspect" that it is suspicious.

Federal law places a greater burden on casinos by requiring them to file reports if they "have any reason to suspect" that a transaction is suspicious, he said.

The federal rules also established the threshold for casinos required to report suspicious activities at properties with $1 million or more in casino revenue per year, as compared with Nevada's reporting threshold of $10 million or more. About 140 Nevada casinos generate more than $1 million but less than $10 million and had to begin reporting suspicious activities for the first time starting March 25, he said.

Separately, an expert said Las Vegas is a top terrorism target because it symbolizes the free-wheeling, hedonist and capitalist culture that terrorists despise most about Western culture.

Las Vegas has succeeded in capturing the essence of modern life by creating a place where people have the freedom to do what they want without being judged by a moral authority, said Peter Tarlow, president of Tourism & More Inc. of College Station, Texas, and a tourism security advisor to the U.S. Bureau of Reclamation.

"Just look at the new ads from the (Las Vegas Convention and Visitors Authority that say) 'What you do here, stays here.' (Las Vegas) is giving you the freedom to be yourself," he said.

But Las Vegas isn't any more of a prime terrorist target than other major cities with symbols of commerce and dense populations, said Marcus Cohen, a Washington D.C. attorney and conference organizer.

Cohen is the managing director of Homeland Education Resource Organization LLC, a newly formed for-profit group that created the Las Vegas conference as the first of what it hopes will become a nationwide series of meetings that connect government agencies with private companies. The conferences would focus on industries that are particularly vulnerable to terrorism and be sponsored by academic institutions rather than suppliers that are capitalizing on beefed-up security measures implemented after the Sept. 11 attacks, Cohen said.

The U.S. government is especially interested in networking with Las Vegas casinos because the casino business employs some of the most sophisticated security experts anywhere, he said.

Local law enforcement officials in Las Vegas already have a fairly close relationship with property surveillance and security personnel in monitoring casino activity, he said. Government officials aim to use that model to help devise closer relationships with private companies in implementing national security measures.

Hospitality companies, and especially megaresorts, also are some of the nation's largest single employers, he said.

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