Regulatory Compliance Management Information
Title 31 refers to 31 CFR Chapter X - Financial Crimes Enforcement Network (FinCEN), the codified regulation that enforces the Bank Secrecy Act (BSA).(The “Bank Secrecy Act” is actually a nickname for the Currency and Foreign Transactions Reporting Act.) The BSA is often referred to as either an anti-money laundering law (AML) or “BSA/AML”.
The Director of the Financial Crimes Enforcement Network (FinCEN) is responsible for enforcing compliance with the BSA. FinCEN was established by the Secretary of the Treasury in 1990 and became an official bureau of the Department of the Treasury in 2002.
Although Title 31 applies to a variety of industries, it is most commonly associated with the Casino and Gaming Industry; this page addresses how Title 31 applies specifically to the Casino and Gaming Industry.
One of the main and most well-known Title 31 requirements is that casinos and card clubs must record and report the identity of individuals who conduct more than $10,000 in a transaction or transactions during a 24-hour period by obtaining a current photo ID and Social Security number.
The Bank Secrecy Act (BSA) was enacted in 1970 to prevent financial crime by establishing an anti-money laundering and counter-terrorism financing statute. In other words, the BSA is legislation aimed at thwarting criminals and terrorists from using U.S. banks as vehicles to financially drive their illicit activities by requiring banks (and other financial institutions) to comply with recordkeeping and reporting requirements.
“It is important for employees to understand that the BSA is not some arbitrary rule that has to be followed. The BSA exists to protect them, their families, and the country.…The bottom line is Title 31 was developed not to occupy your time, but to prevent harmful financial crimes, such as money laundering and identity theft, because these types of crimes fund larger criminal activity”
The Secretary of the Treasury has the authority to issue regulations that enforce this statute. Initially only banks had to comply with BSA regulations, but in 2001, compliance extended to all financial institutions, including casinos and card clubs.
For more information on the Bank Secrecy Act, please click here.
In 1990, the Secretary of the Treasury issued on order that established the Financial Crimes Enforcement Network (FinCEN), whose purpose was to provide support in the prevention of financial crimes. In 1994, the purpose of FinCEN was expanded to include the delegation of regulatory enforcement responsibilities to the Director of the FinCEN. In 2002, the Secretary of the Treasury passed an order that officially established FinCEN as an official bureau in the Department of the Treasury.
31 CFR §103 is the codified regulation for the BSA and gives the FinCEN the authority to implement, administer, and enforce compliance with BSA regulations by receiving, maintaining, analyzing, and disseminating financial transactions data for law enforcement purposes. As you may have surmised, the term “Title 31” comes from the codified regulation of the BSA.
On November 7, 2008, FinCEN proposed a restructuring of 31 CFR §103, in an effort to increase the efficiency and effectiveness of its regulatory oversight. Through this proposal, the regulations codified at 31 CFR §103 (to be clear, §103 refers to “Part 103” of Chapter I) was moved to an entirely new chapter within Title 31: Chapter X (Chapter 10). This move and restructuring provided FinCEN the ability to clarify and make more accessible the regulatory obligations of industries that need to comply with the BSA. As of March 1, 2011, the codified regulation for the BSA is housed at 31 CFR Chapter X.
31 CFR Chapter X restructured and renumbered the regulations from 31 CFR §103 such that each regulation can be distinguished as either a regulation that applies to a specific industry or a regulation that applies to all industries that fall under BSA compliance.
The majority of industries that need to comply with BSA regulations are banks, financial institutions, and the like. One of the industries that do not neatly fall into these categories is the casino/card club industry; the purpose of this page is to address how Title 31 specifically affects casinos and card clubs.
The specific BSA regulations that govern the casino/card club industry are codified at 31 CFR §1021.
The reason why casinos and card clubs are subject to Title 31 compliance is that casinos and card clubs provide certain banking services for large sums of money that are advantageous to criminals looking to launder money or carry out other financial crimes; such services include:
“Enforcement agencies believe these services, combined with the large amount of money that patrons wager, create a high risk for money laundering.”
If a casino or card club has a gross annual gaming revenue (GARA) more than $1,000,000, it is required to comply with Title 31 requirements. In other words, if casino or card club has a GARA less than $1,000,000, Title 31 compliance is not necessary; these casinos and card clubs are subject to another rule – Title 26.
For casinos and card clubs that have a GARA more than $1,000,000, they must comply with the following Title 31 requirements:
A Currency Transaction Report (CTR) is a form that needs to be filled out and submitted online whenever a certain transaction or aggregate transactions involving either the cash-in or cash-out of more than $10,000 in a single gaming day by, or on behalf of, any person.
Cash-in transactions and cash-out transactions should be aggregated separately; in other words, it is when either the aggregate of cash-in transactions or the aggregate of cash-out transactions hit the $10,000 mark that a CTR needs to be filed.
CTRs need to be filled out and submitted electronically through the BSA E-Filing system within 15 calendar days from the day after the $10,000 threshold is reached.
A Suspicious Activity Report (SAR) is a form that needs to be filled out and submitted online whenever there is reason to suspect that a certain transaction or aggregate transactions, or an attempt of a transaction or aggregate transactions, of at least $5,000 may be a possible violation of any law or regulation.
SARs need to be filled out and filed electronically within 30 calendar days of the date the suspicious transaction(s) or activity was initially detected. However, if the person conducting the suspicious transaction(s) or activity is unable to be identified, an additional 30 calendar days are given to electronically file the SAR. In other words, a casinos and card clubs have an absolute maximum of 60 calendar days to file the SAR.
There are several BSA requirements that are related to recordkeeping. This recordkeeping requirement is intended to help regulatory agencies as well as law enforcement agencies to investigate financial crimes, such as money laundering.
When you submit forms to through the BSA E-Filing system, the forms you submit are not kept on file by the system, it is simply transmitted to FinCEN – it is your responsibility to make sure that you have saved a copy of each submitted form. The BSA E-Filing system actually will not let you submit a form until it has been saved; forms submitted through the BSA E-Filing system can be saved onto a secured computer, network, or another appropriate storage device. Forms can also be stored as paper filings or on magnetic media.
In addition to having a recordkeeping system of all submitted forms, there are several other BSA regulations related to recordkeeping compliance that need to be followed:
Considering CTR compliance requires a method to aggregate the cash-in and cash-out transactions by individuals, a Multiple Transaction Log (MTL) – or Action Control Log (ACL) – should be kept. As a general rule of thumb, transactions that are $2,500 - $3,000 are recorded in these logs. These logs are typically kept and used near the Pit, Cage, or Slot areas so that patrons’ transactions can easily be recorded. Logs should be kept for at least a 24-hour period, at the end of which the logs should be turned over to the accounting department for analysis and maintenance.
Each entry on a MTL should contain, at a minimum, the following information:
MTLs are not explicitly required by Title 31 – but casinos and card clubs incorporate MTLs in their recordkeeping procedures so that they are compliant with the aggregates requirement. After all, if the transactions of an individual are not tracked over a 24-hour period, how will the casino/card club know when the $10,000 CTR threshold has been met?
MTLs, or another similar log that aggregates transactions, when made, must be retained for recordkeeping for at least 5 years.
In order for each casino and card club to be fully compliant with Title 31, each employee should be aware of what compliance requirements are which is why an Anti-Money Laundering (AML) program is needed for each casino and card club. To be clear, CTR and SAR procedures, as well as MTL procedures, are included within the ATL program.
The AML needs to be written and developed based upon the casino or card club’s unique risks for money laundering and/or terrorist financing. Since no casino or card club is exactly the same, the AML program from one casino/card club to another may be similar but not exactly word-for-word.
At a minimum, a compliant AML program needs to include the following:
To be clear, in order to validate the identity of individuals (step 5), a form of I.D. must be presented. The following lists the acceptable forms of I.D.; at least one of these must be presented by individuals:
Additionally, individuals must do one of the following to verify their Social Security number2:
If an individual is unable to or refuses to show I.D., no transaction – even cashing-in chips – should be allowed by the individual.
As of July 1, 2012, CTRs and SARs must be filed electronically through the BSA E-Filing system; click here to access the BSA E-Filing website. Prior to this date, CTRs and SARs could be filled out and filed manually.
In essence, Title 31 requirements for casinos and card clubs can be broken down into two main components: recordkeeping and reporting. Make sure you’re correctly doing both – the penalties can be severe!
If your business is licensed by the IRS as either a casino or a card club and has gross annual gaming revenues (GAGR) more than $1,000,000, Title 31 does affect your business and you must comply with Title 31 regulations. However, if your casino is located in Nevada, you do not have to comply with Title 31 regulations unless its GAGA is more than $10,000,000 – if your casino does not meet the $10,000,000 GAGR threshold, it instead needs to comply with Title 26 (IRC Section 6050I) regulations.
If your business is licensed by the IRS as either a casino or a card club and has gross annual gaming revenues (GAGR) less than $1,000,000, Title 31 does not affect your business and you do not have to comply with Title 31 regulations. However, your casino/card club must comply with Title 26 (IRC Section 6050I) regulations.
If your business is neither a casino nor a card club, Title 31 does not affect your business and you do not need to comply with Title 31 requirements. However, if your business is financial in nature (i.e., you provide financial services), your business may be affected by BSA regulations. To learn about whether or not your business needs to comply with BSA regulations, click here.
If a casino or card club willfully does not file a required report or comply with recordkeeping requirements, it is subject to:
If a casino or card club negligently or unintentionally does not file a required report or comply with recordkeeping requirements, it is subject to:
If a casino or card club fails to establish a compliant AML program, it is subject to:
Title 31 Training Programs, Best Practices, and Penalties
FinCEN requires casinos to design and implement their own risk-based compliance program to comply with the Bank Secrecy Act and adhere to a set of regulations and requirements.
The compliance program is a written document designed to assure compliance with Title 31 requirements and provides monitoring of that compliance.
The casino’s AML training and Title 31 compliance program must provide for six items:
A casino’s compliance program must include procedures that:
Key Best Practices & Procedures:
Auditor Red Flags
Finally, it is useful to see tangible examples of WHAT NOT TO DO. Here are a few examples of Title 31 failures and resultant FinCEN penalties:
Although most of the details surrounding Title 31 regulations have been covered above, there are some nuances that have not been covered. To learn more about Title 31 regulations in more detail, please use the following resources:
1Casinos and card clubs must take steps to verify names, permanent addresses, and Social Security numbers (or tax identification numbers); the methods used to verify such data must be included in the written AML program
2if a casino/card club is unable to obtain an individual’s SSN, it is still in compliance with Title 31 as long as a reasonable effort was made to obtain the SSN (or TIN) and a list of names and addresses of individuals for whom SSNs were unable to be collected is maintained and made available upon request by the Secretary of the Treasury or by law enforcement
Multi-Pronged Player Identity Solution
As detailed above, your casino employees and management are challenged with the responsibility of identifying suspicious patron activities, all while going about their everyday duties. UVeritech’s PALIDIN Identity Authentication solution eases their burden by easily and accurately validating player identity, age, and other critical pieces of information.
The PALIDIN system is modular, designed to be deployed in 3 critical areas within the casino:
For the Back office, our PALIDIN Desktop Scanner+PC system utilizes best in class scanning capabilities to forensically interrogate the authenticity of a government issued identity document, such as a drivers license or passport. The authentication results are ported to a PC, where itemized ID security features are displayed, such as detected infrared and ultraviolet printing, microprinting, holograms, barcode-to-printed text data matching, etc. The authentication results and player data and images can be saved locally as a protected pdf for archiving, or uploaded to a secure cloud database.
In the Cashier / Cage environment, where ID authentication speed is essential to ensure positive player experience, we deploy PALIDIN.ONE as a standalone drivers license and passport desktop scanner that presents ID authentication results in less than 10 seconds. No training is required for your employees to learn how to operate the snow globe sized scanner, and the pass / fail results are clearly shown right on top of the scanner itself.
Finally, because your floor employees are key components of your overall security and compliance strategy, we offer the mobile PALIDIN.M ID authentication solution. It uses a smartphone to quickly scan your patron’s ID document and also captures a “selfie” image for a comprehensive identity authentication on-the-go. In less than a minute, from anywhere on the property within range of a cellular signal or WiFi, you’ll have the assurance that a player belongs in your casino.
Our team of fraud prevention specialists is here to guide and provide support for all your fraud prevention needs!
CONTACT OUR FRAUD PREVENTION TEAM
1743 S. Grand Ave., Glendora, CA 91740
(800) 883-8822
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