96-32396. Financial Crimes Enforcement Network Proposed Amendments to the Bank Secrecy Act Regulations Regarding Reporting and Recordkeeping by Card Clubs  

  • [Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
    [Proposed Rules]
    [Pages 67260-67265]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-32396]
    
    
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    DEPARTMENT OF THE TREASURY
    
    Financial Crimes Enforcement Network Proposed Amendments to the 
    Bank Secrecy Act Regulations Regarding Reporting and Recordkeeping by 
    Card Clubs
    
    31 CFR Part 103
    
    RIN 1506-AA18
    AGENCY: Financial Crimes Enforcement Network, Treasury.
    
    ACTION: Notice of proposed rulemaking.
    
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    SUMMARY: The Financial Crimes Enforcement Network (``FinCEN'') is 
    proposing to amend the regulations implementing the statute generally 
    referred to as the Bank Secrecy Act to include certain gaming 
    establishments, commonly called ``card clubs,'' ``card rooms,'' 
    ``gaming clubs,'' or ``gaming rooms'' within the definition of 
    financial institution subject to those regulations.
    
    DATES: Written comments must be received on or before March 20, 1997.
    
    ADDRESSES: Written comments should be submitted to: Office of 
    Regulatory Policy and Enforcement, Financial Crimes Enforcement 
    Network, Department of the Treasury, 2070 Chain Bridge Road, Vienna, 
    Virginia 22182, Attention: NPRM--Card Clubs.
    
    Submission of comments: Comments on all aspects of the proposed 
    regulation are welcome and will be considered if submitted in writing 
    prior to March 20,
    
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    1997. An original and four copies of any comments must be submitted. 
    All comments will be available for public inspection and copying, and 
    no material in any such comments, including the name of any person 
    submitting comments, will be recognized as confidential. Accordingly, 
    material not intended to be disclosed to the public should not be 
    submitted.
    
    Inspection of comments: Comments may be inspected at the Department of 
    the Treasury between 10:00 a.m. and 4:00 p.m., in the Financial Crimes 
    Enforcement Network (``FinCEN'') reading room, on the third floor of 
    the Treasury Annex, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 
    20220. Persons wishing to inspect the comments submitted should request 
    an appointment by telephoning (202) 622-0400.
    
    FOR FURTHER INFORMATION CONTACT: Leonard C. Senia, Senior Financial 
    Enforcement Officer, Office of Regulatory Policy and Enforcement, 
    Financial Crimes Enforcement Network (703) 905-3931, or Joseph M. 
    Myers, Attorney-Advisor, Office of Legal Counsel, Financial Crimes 
    Enforcement Network, (703) 905-3557.
    
    SUPPLEMENTARY INFORMATION:
    
    Introduction
    
        This document proposes (i) to add a definition of ``card club,'' in 
    a new paragraph (8) of 31 CFR 103.11(n), as a component of the 
    definition of ``financial institution'' for purposes of the Bank 
    Secrecy Act rules, (ii) to provide, by means of a new paragraph 
    (7)(iii) in section 103.11(n), for treatment of card clubs generally in 
    the same manner as casinos under the Bank Secrecy Act, (iii) to 
    renumber paragraphs (8) and (9) of section 103.11(n) as paragraphs (9) 
    and (10), respectively, and (iv) to add a new paragraph (11), 
    applicable only to card clubs, to 31 CFR 103.36(b), to require 
    retention by card clubs of records of a customer's currency 
    transactions, and records of all activity at card club cages or similar 
    facilities, maintained in the ordinary course of a club's business. The 
    proposed changes reflect the authority contained in section 409 of the 
    Money Laundering Suppression Act of 1994 (the ``Money Laundering 
    Suppression Act''), Title IV of the Riegle Community Development and 
    Regulatory Improvement Act of 1994, Pub. L. 103-325.
    
    Background
    
        The statute popularly known as the ``Bank Secrecy Act,'' Titles I 
    and II of Pub. L. 91-508, as amended, codified at 12 U.S.C. 1829b, 12 
    U.S.C. 1951-1959, and 31 U.S.C. 5311-5330, authorizes the Secretary of 
    the Treasury, inter alia, to issue regulations requiring financial 
    institutions to keep records and file reports that are determined to 
    have a high degree of usefulness in criminal, tax, and regulatory 
    matters, and to implement counter-money laundering programs and 
    compliance procedures. Regulations implementing Title II of the Bank 
    Secrecy Act (codified at 31 U.S.C. 5311-5330), appear at 31 CFR Part 
    103. The authority of the Secretary to administer the Bank Secrecy Act 
    has been delegated to the Director of FinCEN.
        The range of financial institutions to which the Bank Secrecy Act 
    applies is not limited to banks and other depository institutions. It 
    also includes securities brokers and dealers, money transmitters, and 
    the other non-bank businesses that offer customers one or more 
    financial services.
        State licensed gambling casinos were generally made subject to the 
    Bank Secrecy Act as of May 7, 1985, by regulation issued early that 
    year. See 50 FR 5065 (February 6, 1985).1 Gambling casinos 
    authorized to do business under the Indian Gaming Regulatory Act became 
    subject to the Bank Secrecy Act on August 1, 1996. See 61 FR 7054-7056 
    (February 23, 1996).2
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        \1\ Casinos with gross annual gaming revenue of $1 million or 
    less were, and continue to be, excluded from coverage.
        \2\ Treasury has issued four sets of rules in all relating to 
    the application of the Bank Secrecy Act to casino gaming 
    establishments. See, in addition to the two rules cited in the text, 
    54 FR 1165-1167 (January 12, 1989), and 59 FR 61660-61662 (December 
    1, 1994) (modifying and putting into final effect the rule 
    originally published at 58 FR 13538-13550 (March 12, 1993)).
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        In recognition of the importance of application of the Bank Secrecy 
    Act to the gaming industry, section 409 of the Money Laundering 
    Suppression Act codified the application of the Bank Secrecy Act to 
    gaming activities by adding casinos and other gaming establishments to 
    the list of financial institutions specified in the Bank Secrecy Act 
    itself.3 The statutory specification reads:
    
        \3\ The 1985 action initially making casinos subject to the Bank 
    Secrecy Act had been based on Treasury's statutory authority to 
    designate as financial institutions (i) businesses that engage in 
    activities ``similar to'' the activities of the businesses listed in 
    the Bank Secrecy Act, as well as (ii) other businesses ``whose cash 
    transactions have a high degree of usefulness in criminal, tax, or 
    regulatory matters.'' See 31 U.S.C. 5312(a)(2)(Y) and (Z) (as 
    renumbered by the Money Laundering Suppression Act).
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        (2) financial institution means--
    * * * * *
        (X) a casino, gambling casino, or gaming establishment with an 
    annual gaming revenue of more than $1,000,000 which--
        (i) is licensed as a casino, gambling casino, or gaming 
    establishment under the laws of any State or any political 
    subdivision of any State; or
        (ii) is an Indian gaming operation conducted under or pursuant 
    to the Indian Gaming Regulatory Act other than an operation which is 
    limited to class I gaming (as defined in section 4(6) of such Act) * 
    * *
    
    31 U.S.C. 5312(a)(2)(X). Treasury has previously indicated that it is 
    in the process of rethinking the application of the Bank Secrecy Act to 
    gaming establishments. See 59 FR 61660-61662 (December 1, 1994) and 61 
    FR 7054, 7055 (February 23, 1996). This notice of proposed rulemaking 
    is a step in that process.
    
    Explanation of Provisions
    
    A. Overview
    
        The proposed regulations would expand the range of gaming 
    establishments to which the Bank Secrecy Act applies to include card 
    clubs. Generally card clubs would be subject to the same rules as 
    casinos (a matter on which comment is specifically requested below), 
    unless a specific provision of the rules in 31 CFR Part 103 applicable 
    to casinos explicitly required a different treatment for card clubs.
    
    B. Definition of Card Club
    
        The definition of card club itself is proposed to be added as a 
    component of the definition of ``financial institution'' in a new 
    paragraph 31 CFR 103.11(n)(8).4 Under the proposed amendment, the 
    term would include, inter alia, any establishment of the type commonly 
    referred to as a ``card club,'' ``card room,'' ``gaming club'' or 
    ``gaming room,'' that is duly licensed or authorized to do business 
    either under state law, under the laws of a particular political 
    subdivision within a state, or under the Indian Gaming Regulatory Act 
    or other federal, state, or tribal law or arrangement affecting Indian 
    lands. Card clubs licensed by U.S. territories or possessions would 
    also fall within the definition.
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        \4\ As indicated, no language in the financial institution 
    definition is being deleted; present paragraphs 103.11(n)(8) and 
    (n)(9) would simply become paragraphs (n)(9) and (n)(10), 
    respectively.
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        The general need for and appropriateness of treatment of casinos as 
    financial institutions for purposes of the Bank Secrecy Act have been 
    accepted, as indicated above, since the mid-1980s. Treasury has made 
    clear the need to prevent casinos, which both deal in cash and cash-
    equivalent chips
    
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    and can offer a variety of other financial services to customers, from 
    being used to avoid the effect of the Bank Secrecy Act.5
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        \5\ The preamble to the final rule bringing casinos within the 
    Bank Secrecy Act stated that
        [i]n recent years Treasury has found that an increasing number 
    of persons are using gambling casinos for money laundering and tax 
    evasion purposes. In a number of instances, narcotics traffickers 
    have used gambling casinos as substitutes for other financial 
    institutions in order to avoid the reporting and recordkeeping 
    requirements of the Bank Secrecy Act.
        Inclusion of casinos in the definition of financial 
    institution[s] in 31 CFR Part 103 was among the specific 
    recommendations in the October 1984 report of the President's 
    Commission on Organized Crime, ``The Cash Connection: Organized 
    Crime, Financial Institutions, and Money Laundering.'' The problem 
    was also the subject of hearings in 1984 before the House Judiciary 
    Subcommittee on Crime entitled ``The Use of Casinos to Launder the 
    Proceeds of Drug Trafficking and Organized Crime.''
        In order to prevent the use of casinos in this fashion, Treasury 
    is amending the regulations in 31 CFR Part 103 to require gambling 
    casinos to file the same types of reports [and maintain the same 
    types of records] that it requires from financial institutions 
    currently covered by the Bank Secrecy Act.
        50 FR 5065, 5066, (February 6, 1985); see also 49 FR 32861, 
    32862 (August 17, 1984) (corresponding language in notice of 
    proposed rulemaking).
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        Although application of the Bank Secrecy Act to gaming 
    establishments has heretofore been limited to casinos, that limitation 
    is not a statutory one. As noted, the statutory definition of financial 
    institution includes any establishment licensed as a ``gaming 
    establishment,'' whether the licensing authority is a state, a 
    municipality or other state subdivision, or one of the licensing 
    authorities recognized by the Indian Gaming Regulatory Act. See 31 
    U.S.C. 5311(a)(2)(X)(quoted above).
        Card clubs are a fast-growing segment of the gaming industry, 
    primarily in California. Although card club operations differ, the 
    establishments generally offer facilities for gaming by customers who 
    bet against one another, rather than against the establishment. Most 
    large card clubs run the games, but the clubs earn their revenue by 
    receiving a fee from customers (for example a per table charge) rather 
    than from, as in a classic casino, running games and effectively 
    ``banking'' the games offered so that customers bet against the house.
        While the scope of casinos and card club operations may have 
    differed in the past, they no longer necessarily do so. California and 
    some other states in which card clubs operate do not permit casino 
    gaming (or only permit such gaming in limited forms). But, for example, 
    customers at California card clubs wagered about $8.9 billion in 1995. 
    Against that background, there are two primary reasons that card clubs, 
    like other gaming establishments, require coverage under the Bank 
    Secrecy Act.
        First, many card clubs, like casinos, now offer their customers a 
    wide range of financial services. As it indicated when it proposed 
    extension of the Bank Secrecy Act to tribal casinos, the Treasury has 
    generally sought to apply the Bank Secrecy Act to gaming establishments 
    that provide their customers with a financial product--gaming--and as a 
    corollary offer a broad array of financial services, such as customer 
    deposit or credit accounts, facilities for transmitting and receiving 
    funds transfers directly from other institutions, and check cashing and 
    currency exchange services, that are similar to those offered by 
    depository institutions and other financial firms. The fact that the 
    gaming at card clubs does not directly involve the wagering of house 
    monies in no way alters the fact that vast sums of currency and other 
    funds pass through such establishments, or the fact that card clubs are 
    coming to offer their customers corollary financial services to 
    facilitate the movement of funds.
        Second, card clubs are at least as vulnerable as other gaming 
    establishments to use by money launderers and those seeking to commit 
    tax evasion or other financial crimes, both because of their size and 
    because those institutions lack many of the controls found at casinos. 
    Given their growth, their prevalence in the nation's most populous 
    state, and their potential for expansion, there is no basis for 
    distinguishing card clubs from casinos for purposes of the Bank Secrecy 
    Act.6
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        \6\ Federal and state law enforcement authorities have expressed 
    concern for several years about card clubs as venues for criminal 
    activity. See, e.g., Asian Organized Crime, Part I, S. Rep. 102-346, 
    101st Cong., 1st Sess. (1991); Asian Organized Crime: the New 
    International Criminal, S. Rep. 102-940, 101st Cong., 2nd. Sess. 
    (1992); Office of the Attorney General of California, ``Status of 
    Cardroom Gambling in California and the Proposed Gambling Control 
    Act'' (Public Document, February 1995); cf. Permanent Subcommittee 
    on Investigations, Senate Committee on Governmental Affairs, 
    Hearings: Asset Forfeiture Program--A Case Study of the Bicycle Club 
    Casino, 104th Cong., 2nd. Sess. (March 19, 1996).
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        There is also some indication that the line between card clubs and 
    casinos may be blurring in practice. Thus, FinCEN noted in the preamble 
    to the final rule extending the Bank Secrecy Act to tribal casinos 
    that:
    
        [A]n establishment that claimed to be a gambling ``club'' rather 
    than a casino because it simply offered customers an opportunity to 
    gamble with one another, but that in practice funded certain 
    customers so that other customers were in effect gambling against 
    ``house'' money, and that offered its customers financial services 
    of various kinds, is arguably a casino under present law. Thus, for 
    example, if such a ``club'' failed to file currency transactions 
    reports or allowed a customer to deposit funds in a player bank 
    account in the name of the customer without requiring the customer 
    to provide identifying information, the club would arguably be 
    operating in violation of the Bank Secrecy Act.
    
    61 FR 7055 note 1.
        Given the growth of card clubs and their potential for offering a 
    venue for money launderers, the application of the Bank Secrecy Act to 
    such establishments should not depend on whether games are banked or 
    otherwise backed with house funds.7 Similarly, the fact that some 
    card clubs operating under the terms of the Indian Gaming Regulatory 
    Act, 25 U.S.C. 2701 et seq, may be Class II rather than Class III 
    establishments for purposes of the regulatory provisions of that 
    legislation (so that card clubs are subject to tribal regulation rather 
    than to regulation pursuant to state-tribal compact), does not provide 
    a relevant distinction for Bank Secrecy Act purposes.8 (As was the 
    case with tribal casinos, a card club that operates on Indian lands 
    under a view that compliance with the Indian Gaming Regulatory Act is 
    unnecessary or inconsistent with inherent tribal rights would not for 
    that reason be exempted from the terms of the Bank Secrecy Act, to the 
    extent that those terms would otherwise apply to the card club's 
    operations.)
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        \7\ At present, the receipt of cash in excess of $10,000 by card 
    clubs in a single transaction (or multiple related transactions) is 
    required to be reported under section 6050I of the Internal Revenue 
    Code. The limited cash transaction reporting rules of section 6050I 
    (which apply to currency received in all non-financial trades or 
    businesses) are not as extensive as the reporting rules of the Bank 
    Secrecy Act (which apply both to receipts and payments of currency 
    and are not matched by recordkeeping, suspicious transaction 
    reporting, and anti-money laundering compliance program rules).
        \8\ The National Indian Gaming Commission has taken the position 
    that games banked by players, rather than the house, are nonetheless 
    ``banked card games'' whose operation is required to occur in a 
    Class III facility. Thus it appears that some percentage of card 
    clubs on tribal lands will be, or will be operated within, Class III 
    facilities that will generally become subject to the Bank Secrecy 
    Act on August 1, 1996. See National Indian Gaming Commission 
    Bulletin 95-1 (April 10, 1995). FinCEN understands that certain 
    Asian card games (whose rules employ a betting formula in which a 
    player does not offer to take on all competitors), may be permitted 
    to be offered in Class II facilities for purposes of the Indian 
    Gaming Regulatory Act.
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        Card clubs, like casinos, will only become subject to the Bank 
    Secrecy Act once they generate more than $1 million in ``gross annual 
    gaming revenue.'' Treasury believes that as applied to card clubs the 
    term includes revenue derived from or generated by customer gaming
    
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    activity (whether in the form of per-game or per-table fees, fees based 
    on winnings, rentals, or otherwise) and received by an establishment.
    
    C. Treatment of Card Clubs Under the Bank Secrecy Act
    
        Under the proposed regulations, card clubs would be treated under 
    the Bank Secrecy Act in the same manner as casinos unless specific 
    provisions of the rules in 31 CFR Part 103 explicitly require a 
    different treatment. Thus, card clubs would become subject not simply 
    to the Bank Secrecy Act's currency transaction reporting rules but to 
    the full set of provisions (described by the Congress as ``a 
    comprehensive currency reporting and detailed recordkeeping system with 
    numerous anti-money laundering safeguards'' 9) to which casinos in 
    the United States are subject.
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        \9\ See H.R. Rep. No. 652, 103rd Cong., 2nd Sess. 193 (1994).
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        Treatment of card clubs on a par with casinos would generally 
    impose on such clubs the Bank Secrecy Act rules that apply to casinos. 
    Thus, each card club would be required to file with the Department of 
    the Treasury a report of each receipt or disbursement of more than 
    $10,000 in currency in its operations during any gaming day; 
    aggregation of multiple currency transactions is required in a number 
    of situations. See 31 CFR 103.22(a)(2). The requirement would apply to 
    all receipts or disbursements of currency in connection with gaming 
    activities at the card club, including, but not limited to, transfers 
    of currency for chip purchases or redemptions, exchanges of bills of 
    one denomination for bills of another denomination, exchanges of one 
    currency for another currency, transfers to or from player accounts or 
    deposit facilities, payments or advances on credit, wagers of currency 
    or payments of currency to settle wagers, and transfers intended for 
    conversion to other forms of negotiable instruments or for electronic 
    funds transfer or transmittal out of, or as a result of such transfer 
    or transmittal into, the card club.10
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        \10\ Legislation recently enacted in California adds gaming 
    clubs to the list of financial institutions in that state that are 
    required to report transactions in currency of more than $10,000 to 
    the California Department of Justice. See Assembly Bill 3183 (signed 
    September 28, 1996), amending Cal. Penal Code 14161. The new 
    reporting requirement becomes effective on January 1, 1997. It is 
    anticipated that the California and Bank Secrecy Act currency 
    transaction reporting requirements will be coordinated (as is done 
    in other situations in which Bank Secrecy Act and state reporting 
    rules overlap) to reduce regulatory burden and costs of compliance.
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        It is particularly important to understand that the requirements 
    would apply regardless of where the transfers occur at the card club. 
    Thus no distinction is to be made between, for example, transactions at 
    a cage, cashier, or other central facility, and chip purchases or 
    redemptions from club runners or from dealers or other operators of 
    specific games.
        Each card club would also be required, like a casino, to maintain, 
    and to retain, certain records relating to its operation, including 
    records identifying account holders (see 31 CFR 103.36(a)), records 
    showing transactions for or through each customer's account (see, 
    generally, 31 CFR 103.36(b)), and records of transactions involving 
    persons, accounts or places outside the United States. See 31 CFR 
    103.36(b)(5). Records of transactions of more than $3,000 involving 
    checks or other monetary instruments and records that are prepared or 
    used by a card club to monitor a customer's gaming activity are also 
    among the types of records that would be required to be maintained. See 
    31 CFR 103.36 (b)(8) and (b)(9). (A specific record retention 
    requirement, applicable only to card clubs, is discussed below.) 
    Finally, card clubs would be required to institute training and 
    internal control programs to assure and monitor compliance with the 
    Bank Secrecy Act. See 31 CFR 103.36(b)(10) and 103.54(a).11
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        \11\ In addition, Treasury intends to issue regulations to 
    require classes of non-bank financial institutions, including gaming 
    establishments, to file reports of suspicious transactions. See 31 
    U.S.C. 5318(g)(1).
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        Card clubs within the scope of the proposed rule will in any event 
    remain subject to the filing requirements of section 6050I of the 
    Internal Revenue Code, with respect to their gaming and financial 
    services operations, until the proposals made by this document become 
    effective as a final rule. See section 6050I (a) and (c) of the 
    Internal Revenue Code, 26 U.S.C. 6050I(a) and (c), and Treas. Reg. 
    1.6050I-1(d)(2). Section 6050I of the Code will continue to apply to 
    any non-gaming and non-financial services operations (for example 
    restaurant service), at card clubs that become subject to the Bank 
    Secrecy Act.
    
    D. Additions to Record Retention Requirements
    
        The proposed rule contains one new record retention requirement, 
    applicable only to card clubs. A proposed new paragraph (11) of 31 CFR 
    103.36(b) would require card clubs to retain, for five years, all 
    currency transaction logs, multiple currency transaction logs, and cage 
    control logs that the clubs maintain in their business operations. This 
    requirement is proposed to assure an adequate basis for the audit of 
    compliance or review of compliance by card clubs with the Bank Secrecy 
    Act; the restriction of the requirement to card clubs reflects the 
    absence for such clubs of a state regulatory scheme under whose terms 
    similar records would already be required to be maintained.
    
    E. Request for Comments on Specific Subjects
    
        FinCEN recognizes that card club operations are not uniform 
    throughout the United States, and it is keenly aware of the need to 
    proceed thoughtfully in adopting the rules of the Bank Secrecy Act to 
    the realities of those operations. FinCEN specifically seeks comment on 
    the following questions:
        1. Are there particular parts of the Bank Secrecy Act regulations 
    applicable to casinos generally that cannot or should not be applied to 
    card clubs?
        2. What types of financial services, other than gaming, are offered 
    by card clubs?
        3. Do any elements of the operation of card clubs on tribal lands 
    justify different treatment for such clubs than for other card clubs? 
    Are specific rules necessary to take account of situations in which 
    card clubs operate in Class II facilities that offer several different 
    Class II gaming activities?
        4. How can compliance with the Bank Secrecy Act by tribal card 
    clubs best be examined and enforced?
        In seeking guidance on these and other issues raised by this notice 
    of proposed rulemaking, FinCEN is interested in hearing from all 
    parties potentially affected by the proposed rules, including operators 
    of card clubs, officials of jurisdictions in which card clubs are 
    located, and Indian tribes on whose lands card club gaming is 
    conducted.
        Treasury is continuing to consider issues affecting the application 
    of the Bank Secrecy Act to the gaming industry generally. Those issues 
    include whether special rules should be applicable to small gaming 
    establishments, and how best to implement with respect to gaming 
    establishments the general provisions added to the Bank Secrecy Act by 
    the Annunzio-Wylie Anti-Money Laundering Act of 1992, Title XV of the 
    Housing and Community Development Act of 1992, Pub. L. 102-550, and the 
    Money Laundering Suppression Act.
    
    Proposed Effective Date
    
        The amendments to 31 CFR Part 103 proposed in this notice of 
    proposed rulemaking will become effective 90 days following publication 
    in the
    
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    Federal Register of the final rule to which this notice of proposed 
    rulemaking relates.
    
    Special Analyses
    
        It has been determined that this notice of proposed rulemaking (i) 
    is not subject to the ``budgetary impact statement'' requirement of 
    section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
    4), and (ii) is not a significant regulatory action as defined in 
    Executive Order 12866. It is not anticipated that this proposed rule, 
    if adopted as a final rule, will have an annual effect on the economy 
    of $100 million or more. Nor will it, if so adopted, affect adversely 
    in a material way the economy, a sector of the economy, productivity, 
    competition, jobs, the environment, public health or safety, or state, 
    local or tribal governments or communities. The proposed rule is 
    neither inconsistent with, nor does it interfere with, actions taken or 
    planned by other agencies. Finally, it raises no novel legal or policy 
    issues.
        A ``description of the reasons why action by the agency is being 
    considered'' and a ``succinct statement of the objectives of, and legal 
    basis for, the proposed rule''--all as required by 5 U.S.C. 553(b)--are 
    found elsewhere in this preamble.
    
    Paperwork Reduction Act
    
        The proposed rule would add a new paragraph (b)(11) to section 
    103.36 to require card clubs to retain records, created in the ordinary 
    course of business, (i) of currency transactions (for example, currency 
    transaction logs and multiple currency transaction logs) and (ii) of 
    all activity at card club cages or similar facilities, including, 
    without limitation, cage control logs. FinCEN believes that, as a 
    matter of usual and customary business practice, card clubs collect and 
    maintain information about currency and cage transactions conducted by 
    their customers; proposed paragraph (b)(11) would require simply that 
    such records be retained for at least five years (the generally 
    applicable Bank Secrecy Act record retention period). FinCEN thus 
    believes that the retention requirement of proposed 103.36(b)(11), the 
    only new retention requirement in the proposed rule, would impose a 
    minimal additional burden on the card club industry. Nevertheless, 
    because proposed 103.36(b)(11) is a recordkeeping obligation not 
    presently found in 31 CFR Part 103, FinCEN hereby presents the 
    following information concerning the retention of information on 
    currency and cage transactions, in accordance with requirements of the 
    Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., to assist 
    those persons wishing to comment on the proposed information retention 
    requirement.
    
    Proposed Collection Retention Requirement
    
        Description of Respondents: All card clubs conducting transactions 
    in currency and cage transactions with their customers and creating 
    records of such transactions in the ordinary course of business.
        Frequency: Each time a currency or cage transaction is recorded.
        Estimated Number of Currency and Cage Transactions: Unknown.
        Estimate of Total Annual Burden on Card Clubs: Recordkeeping burden 
    estimate = approximately 686 hours per year.
        Estimate of Total Annual Cost to Card Clubs for Hour Burdens: Based 
    on $20 per hour, the total cost of compliance with the proposed 
    recordkeeping rule is estimated to be approximately $14,000.
        Estimate of Total Other Annual Costs to Respondents: None.
        FinCEN specifically invites comments on the following subjects: (a) 
    Whether the proposed collection of information is necessary to further 
    the purposes of the Bank Secrecy Act, including whether the information 
    retained shall have practical utility; (b) the accuracy of FinCEN's 
    estimate of the burden of the proposed collection of information; (c) 
    ways to enhance the quality, utility, and clarity of the information to 
    be retained; and (d) ways to minimize the burden of the collection of 
    information on the affected industry, including through the use of 
    automated storage and retrieval techniques or other forms of 
    information technology.
        In addition, the Paperwork Reduction Act of 1995, supra, requires 
    agencies to estimate the total annual cost burden to respondents or 
    recordkeepers resulting from the retention of information. Thus, FinCEN 
    also specifically requests comments to assist with this estimate. In 
    this connection, FinCEN requests commenters to identify any additional 
    costs associated with the retention of the information covered by the 
    requirement.
        The information collection in the proposed rule has been submitted 
    to the Office of Management and Budget for review under section 3507(d) 
    of the Paperwork Reduction Act of 1995. Comments on the proposed 
    collection may be directed to the Office of Information and Regulatory 
    Affairs of OMB, attention: Desk Officer for the Treasury Department. 
    Responses to this request for comments from FinCEN will be summarized 
    and included in the request for Office of Management and Budget 
    approval. All comments will become a matter of public record.
    
    Drafting Information
    
        This notice of proposed rulemaking was prepared in FinCEN's Office 
    of Legal Counsel, with the participation of staff members of FinCEN's 
    Office of Regulatory Policy and Enforcement.
    
    List of Subjects in 31 CFR Part 103
    
        Authority delegations (Government agencies), Banks, banking, 
    Currency, Foreign banking, Gambling, Investigations, Law enforcement, 
    Reporting and recordkeeping requirements, Taxes.
    
    Proposed Amendments to the Regulations
    
        Accordingly, 31 CFR Part 103 is proposed to be amended as follows:
    
    PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND 
    FOREIGN TRANSACTIONS
    
        1. The authority citation for Part 103 continues to read as 
    follows:
    
        Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5330.
    
        2. Section 103.11 is amended by redesignating paragraphs (n)(8) and 
    (n)(9) as paragraphs (n)(9) and (n)(10), respectively, and by adding 
    new paragraphs (n)(7)(iii) and (n)(8) to read as follows:
    
    
    Sec. 103.11  Meaning of terms.
    
    * * * * *
        (n) * * *
        (7) * * *
        (iii) Any reference in this Part, other than in this paragraph 
    (n)(7) and in paragraph (n)(8), to a casino shall also include a 
    reference to a card club, unless the provision in question contains 
    specific language varying its application to card clubs or excluding 
    card clubs from its application.
        (8)(i) Card club. A card club, gaming club, card room, gaming room, 
    or similar gaming establishment that is duly licensed or authorized to 
    do business as such in the United States, whether under the laws of a 
    State, of a Territory or Insular Possession of the United States, or of 
    a political subdivision of any of the foregoing, or under the Indian 
    Gaming Regulatory Act or other federal, state, or tribal law or 
    arrangement affecting Indian lands (including, without limitation, an 
    establishment operating on the assumption or under the view that no 
    such authorization is required for
    
    [[Page 67265]]
    
    operation on Indian lands for an establishment of such type), and that 
    has gross annual gaming revenue in excess of $1,000,000. The term 
    includes the principal headquarters and every domestic branch or place 
    of business of the establishment. The term ``casino,'' as used in this 
    Part shall include a reference to ``card club'' to the extent provided 
    in paragraph (n)(7)(iii).
        (ii) For purposes of this paragraph (n)(8), ``gross annual gaming 
    revenue'' means the gross revenue derived from or generated by customer 
    gaming activity (whether in the form of per-game or per-table fees, 
    however computed, rentals, or otherwise) and received by an 
    establishment, during either the establishment's previous business year 
    or its current business year. A card club that is a financial 
    institution for purposes of this Part solely because its gross annual 
    revenue exceeds $1,000,000 during its current business year, shall not 
    be considered a financial institution for purposes of this Part prior 
    to the time in its current business year when its gross annual revenue 
    exceeds $1,000,000.
        3. Section 103.36 is amended by adding a new paragraph (b)(11) to 
    read as follows:
    
    
    Sec. 103.36  Additional records to be made and retained by casinos.
    
    * * * * *
        (b) * * *
        (11) In the case of card clubs only, records of all currency 
    transactions by customers, including without limitation, records in the 
    form of currency transaction logs and multiple currency transaction 
    logs, and records of all activity at cages or similar facilities, 
    including, without limitation, cage control logs.
    * * * * *
        Dated: December 16, 1996.
    Stanley E. Morris,
    Director, Financial Crimes Enforcement Network.
    [FR Doc. 96-32396 Filed 12-19-96; 8:45 am]
    BILLING CODE 4820-03-P
    
    
    

Document Information

Published:
12/20/1996
Department:
Treasury Department
Entry Type:
Proposed Rule
Action:
Notice of proposed rulemaking.
Document Number:
96-32396
Dates:
Written comments must be received on or before March 20, 1997.
Pages:
67260-67265 (6 pages)
PDF File:
96-32396.pdf
CFR: (2)
31 CFR 103.11
31 CFR 103.36