Anti-Money Laundering (AML) Legislation
Title 31 of the Banking Secrecy Act directly addresses Casino and Card Clubs. It recognizes that gaming establishments may have weaker financial controls, less established customer relationships, and a higher risk clientele than traditional financial institutions. Title 31 brings significant scrutiny by Federal departments of Treasury and Justice, domestic and international organizations and a requirement for compliance monitoring and reporting.
To meet the Title 31 standards, casinos must:
1) strengthen their relationship with players,
2) track sophisticated transactions (or bundles) that hide the nature of the laundering attempts
3) establish monitoring capabilities
4) report to Federal oversight agencies
The risk in failure to meet these standards includes penalties, exposure to security risks, even loss of gaming licenses
Overview of AML
AML compliance is a 4-point strategy.
- Know your Customer (KYC) which includes maintaining a comprehensive 360-degree profile of all players’ interaction with the casino/resort, and an understanding of play history to detect deviations. Importing in this component is a list of politically exposed persons (PEP), banned players, known violators, and other “bad actors” who can put at risk the casino even before a transaction is made.
- Transaction Monitoring that has real-time and batch monitoring of cash and non-cash transactions (i.e. vouchers) with heuristics that show an attempt to structure large transactions to avoid scrutiny. Casinos must use multiple touchpoints to monitor activities on and off the casino floor.
- Case Management. Even small casinos have hundreds of thousands of active players and millions of ratings weekly. AML requires identifying and tracking players through current and historical points of view, along with ways to monitor, resolve and report ongoing caseload. Additionally, compliance monitoring requires players, transactions, cases, and their adjudication to be auditable.
- Reporting and Administration. This includes compliance reporting, transactional reporting, auditing, and submission of Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs) to FinCen.
The iQ-AML Solution
IQ-AML is a full cycle solution, integrating disparate vendor source system (POS, SDS, Table Games, Sports, Hotel, Player DB) to build a transaction flagging mechanism and case management system to ultimately allow casinos to meet compliance requirements and file SARs and CTRs to oversight agencies. It is web based and secure within a casino’s local network and security requirements.
On that foundation, IQ-AML is a management system that maximizes staff efficiency, querying and reporting. It is a flexible, rule-based design to allow for multiple casino sites, gaming types, and varying resort amenities.
Dynamic alert scenarios let casinos build rules for flagging players’ suspicious activity. It can be as broad or idiosyncratic as desired.
How iQ-AML Works: Compliance Monitoring
- Integrates with iQ-Gaming. Since KYC is seen as the first layer of compliance, we leverage iQ-Gaming’s ability to see the player across multiple touch points. iQ-AML can use the same processes, and sources to SDS, Player Hotel Management, Retail POS, Cash Transaction at kiosks and cages for batch and real-time alerting of suspicious transactions.
- High Level player and play summaries. iQ-Gaming tables such as MarketingMetrics are used to allow IQ-AML to see player behaviors in a historical context. Player Daily Totals are used to identify play across a number of gaming modalities and time silos. This is not another “new source” of data that needs to be validated and maintained. It is the same operational data used in casino management, executive reporting, and financial audit.
- Screening. List management. IQ-AML incorporates information from local (casino maintained) lists, published national/international lists as feeds from 3rd party vendors for PEP, banned players, known bad actors. List management can flag players before they ever violate AML laws or allow for locally maintained lists (i.e.hosted or high spend players, voluntary bans…) to appropriately trigger alerts.
How iQ-AML Works: Risk Assessment, Alert Management
Risk assessment is the blend of real-time and batch data, national and international management, local knowledge and KYC, and the casino’s human resources. It allows for the knowledge and experience base of the employees closest to the suspect’s activity, idiosyncrasies and transactions. The alerts are based on the following:
- Rule-based scenarios tailored to enterprise-level configurations
- Sudden deviation from a past history of transaction behavior
- Gaps in KYC
- Previous SAR/CTR incidents
How iQ-AML Works: Case Management
Reporting Cash Transactions (CTR) and Suspicious Activity (SAR), as well as compliance audits, are required by AML. IQ-AML automates these essential components so that if a case is ultimately determined to be illegal/suspicious it can be transmitted directly to portals established by the oversight agencies. The electronic submission is fast, minimizes staff effort, and reduces error. At the same time, IQ-AML maintains the documentation, transactions, internal correspondents and other essential records as an audit trail that led to the report. This allows for post-incident review and modification to policies, procedures, standards. It also has reporting components (standardized reports dashboards, automated email functions) to keep the casino stakeholders aware of any issues or trends.