On October 3rd, the Financial Crimes Enforcement Network (FinCEN) assessed a $12 million penalty against the sports betting company CG Technology. Like something out of a bad TV crime drama, CG executives were involved with an illegal gambling operation dubbed the “Jersey Boys.” CG failed to implement an anti-money laundering (AML) compliance system and to train its staff accordingly, which led to repeated failures to file required reports on currency transactions and suspicious activities. The fine is one of the largest ever for an entity in the gambling industry and highlights FinCEN’s increasingly aggressive AML enforcement efforts, as well as the agency’s growing focus on entities outside the financial industry, as traditionally understood.
Over the last several years FinCEN has dramatically ramped up its enforcement activity. Our analysis found both the number of individual enforcement actions brought and the aggregate dollar amount of penalties assessed by the agency skyrocketed between 2011-2015 when compared with the five-years prior.
The number of enforcement actions rose 75% while the total dollar amount of penalties assessed was up a dramatic 431%. During the last five-years alone, companies and individuals have paid well over a billion dollars related to FinCEN enforcement actions, including payments that concurrently satisfied fines from multiple agencies. Many of these instances resulted in multi-million dollar penalties such as $37.5 million for TD Bank, $8 million for Caesars Palace, $10 million for Trump Taj Mahal, and $4.1 million for Saddle River Valley Bank.
As if this sharp uptick in enforcement wasn’t enough to have businesses on edge, FinCEN has also been expanding the variety of entities it pursues, moving beyond traditional financial institutions. For example, earlier this month FinCEN Acting Director Jamal El-Hindi authored a blog post focusing specifically on the casino industry. Similarly, our analysis found a 200% increase in enforcement actions against money services businesses when comparing 2011-15 versus the prior five years. FinCEN has also clarified that the definition of money services business includes many entities involved in blockchain-based trading, including bitcoin exchanges and processors, bringing another industry within the agency’s orbit.
While we can’t predict the future, recent events suggest anti-money laundering concerns will not ebb. Earlier this year the leaked Panama Papers exposed problems arising from financial opacity and prompted the Treasury Department to take action to make beneficial ownership more transparent.
All of this suggests that FinCEN and other AML regulators will continue to aggressively pursue violators, including those in industries not traditionally associated with money laundering.