Card Club Offered Reduced Penalty for Compliance Improvements
On November 15, 2017, FinCEN assessed a civil penalty of $8 million against Artichoke Joe’s, a card club based in San Bruno California. The club allegedly ignored suspicious transfers of gaming chips and criminal activity taking place in plain sight. The press release stated that the penalty resulted from “the card club’s failure to establish adequate internal controls and its willful violations of the Bank Secrecy Act.” The gaming industry is vulnerable to exploitation by criminal money laundering schemes and must be vigilant for suspicious activity and have procedures in place to detect and report it.
However, what makes this case particularly interesting is a recent revision to the civil penalty. On May 3, 2018 FinCEN announced a revised assessment that allows the casino to reduce the penalty by $3 million if they successfully complete sufficient improvements to their compliance departments. The improvements include hiring an independent consultant to conduct reviews of the AML program, hiring a BSA compliance officer, and adopting a program that specifically addresses the issues facing the financial institution. This demonstrates that post-violation remediation is a possibility for institutions facing penalties.