BSA-AML Compliance Group

Earlier today, the U.S. Department of the Treasury issued its 2024 National Strategy for Combating Terrorist and Other Illicit Financing (available here: https://lnkd.in/e8U8EKTX). This strategy document is designed to address key risks noted in Treasury's 2024 National Money Laundering, Terrorist Financing, and Proliferation Financing Risk Assessments, which were released in February. The thorough 50-page document and details a number of illicit finance issues related to various threats and vulnerabilities across the entire financial system landscape. As pertinent to casinos and card clubs, the report highlights the raised risk profile of gaming activity noted in the 2024 Money Laundering Risk Assessment, noting that regulatory and supervisory capacity "may not have kept pace with the growth of these sectors." It recommends increased resources for examinations of various non-bank financial institutions, including casinos and card clubs as well as other categories of institutions, and working towards a sustainable funding model for both supervision and enforcement. Among other things, the Report also recommends guidance regarding the AML/CFT roles and responsibilities of third-party online gaming operators, and to establish "a nationwide Casino AML/CFT Task Force to strengthen federal-state-tribal law enforcement and supervisory coordination." Furthermore, the Report recommends that Treasury continue to evaluate risks and threats regarding the gaming sector and to work with the private sector to identify and report such threats, and to evaluate any regulatory gaps. We'll be addressing these issues and recommendations in depth at the August 2024 BSA/AML Gaming Conference in August (https://lnkd.in/gzeCvTP8). #antimoneylaundering #casinos #gaming #bsaamlcompliance https://lnkd.in/e8U8EKTX

We are just six short months away from the Annual BSA/AML Gaming Conference in Las Vegas, Nevada, from August 13-15, 2024 (along with a "fundamentals" day on Monday, August 12th). This Conference is the largest casino AML/illicit finance compliance conference in the country. The event is designed to share perspectives, guidance, and new issues to the gaming compliance community, directly from the perspectives of regulators, experienced compliance professionals, casino leadership, and law enforcement. Last year, we had amazing speakers from across government – civil and criminal, state and federal – across industry, and from academia. Last year's attendees stated: “I loved it! I always learn so much but this one was the best so far” and called it the “absolute best BSA/AML casino conference available in the industry” and “an outstanding experience that left me not only informed but also inspired.” One participant stated “Not only was there a world of knowledge in the room, but it was such an incredible opportunity to network with very valuable people in the industry who all work towards a common goal.” We’re planning on an even better conference this year, and lining up our government speakers and other experts for what we plan to be an incredible agenda. You have no idea what amazing speakers and agenda items we have planned. It's going to be fantastic -- and it will be all the more fantastic if you join us! #antimoneylaundering #casinos #bsaamlgamingconference https://lnkd.in/gzeCvTP8

As last year's attendees certainly remember, we were honored to have Deputy Assistant Secretary Scott R. of the U.S. Department of the Treasury deliver the opening keynote address for the 2023 BSA/AML Gaming Compliance Conference. Deputy Assistant Secretary Rembrandt alluded to the fact that the Treasury Department, and specifically his office, was working on the 2024 National Risk Assessments for Money Laundering, Terrorist Finance, and Proliferation Finance. Today, Treasury published those reports. All three documents are important reading, and are collectively available here: https://lnkd.in/eHVRSvZB. As relevant to gaming, the Terror Finance Risk Assessment notes (at page 8) that ISIS "has sought to aggressively fundraise" online through a variety of sources, including online gaming platforms." But the most thorough discussion comes up in the National Money Laundering Risk Assessment, where Treasury dedicates a chapter to illicit finance issues connected to the casino/gaming industry. The discussion includes a special case study/focus section on online gaming. (The chapter on casinos begins on page 82, and the report is available here: https://lnkd.in/ewyrVcaz). At this year's conference (https://lnkd.in/gzeCvTP8), we'll do a deep dive into this critical report, which was drafted in consultation with agencies throughout the government. And--once again--we'll have many of those agencies represented to speak to and engage with our audience. We look forward to seeing you there! #antimoneylaundering #casinos #aml #amlcompliance

Today, Mike Mosier, Katja Gilman and I are sharing a paper that begins a conversation around, & proposes a conceptual framework for, how to answer the "illicit finance" policy question as it relates to DeFi. A brief discussion below, with links to the full paper + a summary document. Full paper here: https://lnkd.in/eWRJhVGP (summary document in comments) The paper sets the stage with a brief overview of the U.S. financial integrity laws--AML/CFT + sanctions--and the ways those laws are implemented by intermediaries, incl a special class of intermediaries known as "financial institutions" ("FIs") under the BSA. (Sec I.) We also explain what DeFi really is & is not, as well as the sources of illicit finance risk in DeFi which are very different than in traditional finance--cyber risk, system management risk & usage risk. (Sec II.) (Thanks to Jarrod Watts for the DeFi graphic which is also included in the paper.) Section III provides a 3-part framework on how to think about combating illicit finance in DeFi. First, the framework sets out a definition of “independent control,” grounded in the 2019 FinCEN Guidance, in order to identify smart-contract based financial protocols w centralized intermediaries that may otherwise call themselves "DeFi." Tech systems w people who have "independent control" over them are "on-chain CeFi" as noted in an article by Katrin Schuler, Ann Sofie Cloots and Fabian Schär), and are more likely subject to regulation including for illicit finance, but this requires examining "facts & circumstances". System Control Persons (those who have "independent control") are not necessarily financial institutions, and the definition of SCP is not intended to capture governance token holders, DAOs or third party, exogenous touchpoints like oracles. Second, we propose classifying genuine DeFi protocols--neutral, decentralized software--as “critical infrastructure,” subject to oversight & security coordination by the Treasury Department’s Office of Cybersecurity and Critical Infrastructure Protection (“OCCIP”). The "critical infrastructure" framework is coordinated by CISA, which oversees network technology & physical architecture "critical" to U.S. national & economic security in 16 sectors, including in financial services. CISA & its coordinating arms (including OCCIP) are not regulators. Genuine DeFi Systems are technological infrastructure underpinning a new approach to conducting financial transactions & given the way in which they function, OCCIP could make meaningful contributions to the safe operation of genuine DeFi Systems. [thread continues in comments]

It appears Special Agents of the IRS-Criminal Investigation identified an illegal bookmaking operation in the MGM Casino in Las Vegas. According to the news reports, the Special Agents were able to flip the illegal bookmaker into identifying a casino executive who allowed this activity to happen. The casino executive has pleaded guilty to criminal charges. Casino executives and BSA officers need to ensure there is no place for illegal bookmaking in their casinos. At this year's BSA-AML Gaming Conference in Las Vegas, we will dissect this case and provide solutions to preventing this. Hope to see you there, Aug. 12-15, 2024. https://lnkd.in/gU4dPs8a

Early Bird Registration is now open for the 2024 BSA/AML Gaming Conference which will be held at Caesars Palace in Las Vegas on August 12-15, 2024. For new industry participants and those seeking to sharpen their skills in a refresher course, we are offering an optional “Fundamentals Day” on Monday, August 12. Once again, this year's conference will be one of the most exciting and informative conferences ever held for the gaming industry! Hear directly from senior officials from U.S. Treasury, FinCEN, IRS Criminal Investigation, Department of Justice, the Office of Foreign Assets Control (OFAC), the FBI, IRS-BSA Examiners, and your peers in the gaming industry about best practices and solutions to challenges facing the gaming industry. https://lnkd.in/gaiD3_md