Money laundering is defined as the process in which profits earned by criminal activity are converted into funds that “appear” to have been acquired by legal means. This is normally carried out by moving the illegal funds through a quick series of financial transactions. When done successfully, money laundering will hide the criminal act that generated the funds as well as conceal the identity of those individuals responsible.
Anti-Money Laundering (AML) refers to measures taken by businesses, as mandated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which are implemented to prohibit and prevent money laundering from taking place.
On July 10, 2019, the Canada Gazette formally released the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “Amending Regulations”). This followed the June 2018 release of the draft Amending Regulations. It affects regulated entities such as casinos.
The result will be that casino operators will be faced with more reporting and monitoring requirements.
Here are just some of the reporting and monitoring requirements that casino operators will be required to produce in the Amending Regulations:
- Casino operators will be required to report specific types of transactions of $10,000 or more to the Financial Transactions and Analysis Centre of Canada. Also, casino operators are required to report payments of $10,000 or more in a single transaction, like the redemption of chips, tokens, plaques, or front cash withdrawal.
- Casino operators are obligated to keep a record of large cash transactions, specifically of every amount of $10,000 or more in cash that the casino receives from an individual or entity in a single transaction.
- Casino operators are also required to keep an accurate record of every account the casino opens. This account record must include the account holder’s signature card, contact and vital information, and other details. Also, casinos are to keep a detailed record of every transaction that is processed within the casino, following the requirements in sections 74(1)-(2) of the Amending Regulations.
- Casino operators need to verify the identity of all individuals associated with the account. They must include information for whom the casino opens the account, who is authorized to give directions involving the account, and who conducts a transaction in respect of which the casino is required to keep a record.
- The Amending Regulations explains how a payment of $10,000 in a single transaction is to be defined in respect of electronic transfers of funds. For instance, if a casino operator makes two or more payments that have a combined total $10,000 or more within twenty-four consecutive hours, those payments will be considered a single payment of $10,000 or more, if the casino operator knows that the payments were requested or received by, or on behalf of, the same person or entity.
- Casino operators are also required to take the necessary steps to figure out whether an individual requesting a disbursement is acting on behalf of a third party. Therefore, the casino operator must attain the individual’s contact information as well as find out the relationship between the third party and the individual making the request.
In order to comply with these new regulations, Canadian casino operators will be faced with producing more detailed and accurate reporting protocols. This will undoubtedly require them to ask for more information from their clients. They will also be responsible to increase and improve their monitoring tactics to ensure compliance.