Agency Information Collection Activities; Proposals, Submissions, and Approvals: Anti-Money Laundering Program Requirements for Casinos

Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Anti-Money Laundering Program Requirements for Casinos

Dates

Written comments are welcome and must be received on or before October 15, 2024.

Supplementary Information

I. Statutory and Regulatory Provisions

The legislative framework generally referred to as the Bank Secrecy Act (BSA) consists of the Currency and Foreign Transactions Reporting Act of 1970, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)  ⁽¹⁾ and other legislation, including the Anti-Money Laundering Act of 2020 (AML Act). ⁽²⁾ The BSA is codified at 12 U.S.C. 1829b, 1951-1960 and 31 U.S.C. 5311-5314, 5316-5336, including notes thereto, with implementing regulations at 31 CFR chapter X.

The BSA authorizes the Secretary of the Treasury (Secretary) to, inter alia, require financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, or regulatory matters, risk assessments or proceedings, or in the conduct of intelligence or counter-intelligence activities to protect against terrorism, and to implement anti-money laundering and countering the financing of terrorism (AML/CFT) programs and compliance procedures. ⁽³⁾ The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN. ⁽⁴⁾

Pursuant to 31 U.S.C. 5318(h)(1), financial institutions must establish AML/CFT programs to guard against money laundering and the financing of terrorism. ⁽⁵⁾ Such programs must include, at a minimum: (a) the development of internal policies, procedures, and controls; (b) the designation of a compliance officer; (c) an ongoing employee training program; and (d) an independent audit function to test programs. ⁽⁶⁾ On March 12, 1993, FinCEN issued regulations, under separate statutory authority codified at 31 U.S.C. 5318(a)(2), requiring casinos to develop and implement written BSA compliance programs. ⁽⁷⁾ FinCEN subsequently amended those regulations after passage of the USA PATRIOT Act to state that a casino would be "deemed to satisfy the requirements of 31 U.S.C. 5318(h)(1) if it implements and maintains" an AML program, as described in" 31 CFR 1021.210(b). ⁽⁸⁾

This notice renews the OMB control number associated with the casino AML program regulations. This notice is not renewing the OMB control numbers associated with other types of financial institutions' AML program regulatory requirements, which were renewed as part of a separate notice published in April 2024. ⁽⁹⁾ This notice also does not address any changes to requirements governing AML programs that FinCEN is proposing to make pursuant to section 6101(b) of the AML Act; FinCEN addressed the paperwork and respondent burden of such proposed changes in the notice of proposed rulemaking (NPRM) entitled Anti-Money Laundering and Countering the Financing of Terrorism Programs, published in July 2024. ⁽¹⁰⁾

II. Paperwork Reduction Act of 1995 (PRA) 

Title: Anti-money laundering program requirements for casinos (31 CFR 1021.210, 31 CFR 1021.410(b)(10)  ⁽¹²⁾ ).

OMB Control Number: 1506-0051.

Form Number: Not applicable.

Abstract: FinCEN is issuing this notice to renew the OMB control number for the AML program requirements for casinos.

Affected Public: Businesses or other for-profit institutions.

Type of Review: Renewal without change of a currently approved information collection.

Frequency: As required.

Estimated Number of Respondents: 1,277 casinos. ⁽¹³⁾

Estimated Recordkeeping Burden: In Part 1 of this notice, FinCEN describes the distribution of the estimated number of casinos by type. In Part 2, FinCEN proposes for review and comment a renewal of the calculation of the annual PRA burden that includes a scope and methodology similar to that used in the 2020 notice to renew the OMB control number for the casino AML program requirements. ⁽¹⁴⁾

Part 1. Distribution of the Casinos Covered by this Notice

The distribution of casinos, by type, covered by this notice is reflected in table 1 below:

As noted above, 31 U.S.C. 5318(h) mandates that financial institutions establish AML/CFT programs to guard against money laundering and the financing of terrorism. Such programs must include, at a minimum: (a) the development of internal policies, procedures, and controls; (b) the designation of a compliance officer; (c) an ongoing employee training program; and (d) an independent audit function to test programs. ⁽¹⁵⁾

The AML program regulations for casinos require casinos to implement AML programs that are reasonably designed. ⁽¹⁶⁾ The AML program must be in writing and must be independently tested for compliance with a scope and frequency commensurate with the money laundering and terrorist financing risks posed by the products and services provided by the casino. ⁽¹⁷⁾

In connection with a variety of initiatives FinCEN is undertaking to implement the AML Act, FinCEN intends to conduct, in the future, additional assessments of the PRA burden associated with BSA requirements.

Part 2. Annual PRA Burden and Cost

For purposes of estimating casino and card rooms' AML program annual PRA burden(s), FinCEN continues to view the recordkeeping burden associated with AML program requirements as the sum of four discrete activities. The scope of the annual PRA burden and cost estimates of the casino AML program requirements in this renewal therefore remains subdivided as follows: maintaining and updating the AML program documentation (Activity A); storing the written AML program (Activity B);  ⁽¹⁸⁾ producing a copy of the written AML program if requested by regulatory examiners or law enforcement (Activity C); and complying with the requirements in 31 CFR 1021.210(b)(2)(v) and (vi), which are unique to casino AML program regulations (Activity D). ⁽¹⁹⁾

For purposes of estimating the casino AML program annual PRA burden, FinCEN continues to estimate the hourly burden per activity using the same burden estimates that were used in the 2020 notice to renew the OMB control number for the casino AML program requirements. ⁽²⁰⁾

• Activity A-FinCEN continues to estimate the incremental annual PRA burden of maintaining and updating a written AML program at an average of one hour per casino, consistent with the burden estimate in the 2020 renewal of this OMB control number and in the renewal of the AML program requirements for other types of financial institutions in 2024. ⁽²¹⁾

• Activity B-Required written AML programs are stored as electronic files. The estimated annual burden (five minutes per financial institution) represents the administrative burden involved in processing the storage of the written program. FinCEN continues to estimate the incremental annual PRA burden of storing an AML program at an average of five minutes per casino.
• Activity C-Producing the written AML program to regulatory or law enforcement agencies, upon their request, is performed electronically. Historically, FinCEN has estimated the annual burden of producing the written program at an average of five minutes per financial institution. This estimated annual burden represents the administrative burden involved in producing the program upon request once per year. FinCEN continues to estimate the incremental annual PRA burden of producing an AML program at five minutes per casino.

• Activity D-In the 2020 renewal of the casino AML program regulations, FinCEN estimated the annual PRA burden to comply with 31 CFR 1021.210(b)(2)(v) and (vi) would average approximately 99 hours per casino. FinCEN continues to estimate that the annual incremental PRA burden of complying with these requirements is 99 hours per casino. ⁽²²⁾

Under these assumptions, FinCEN's estimate of the annual incremental PRA burden is 127,912 hours, as detailed in table 2 below.

FinCEN is utilizing the same fully-loaded composite hourly wage rate of $106.30 utilized in the 2024 NPRMs entitled Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Companies and Anti-Money Laundering and Countering the Financing of Terrorism Programs, as well as in recent 60-Day Notices to renew OMB control numbers corresponding to specific BSA regulations. ⁽²³⁾

The total estimated cost of the annual PRA burden is $13,597,045.60, as reflected in table 3 below:

Estimated Number of Respondents: 1,277 casinos, as set out in table 1.

Estimated Total Annual Recordkeeping Burden: The estimated annual PRA burden is approximately 127,912 hours, as set out in table 2.

Estimated Total Annual Recordkeeping Cost: The estimated total annual PRA cost is approximately $13,597,045.60, as set out in table 3.

An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Records required to be retained under the BSA must be retained for five years. ⁽²⁴⁾

Request for Comments: Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (i) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (ii) the accuracy of the agency's estimate of the burden of the collection of information; (iii) ways to enhance the quality, utility, and clarity of the information to be collected; (iv) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (v) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

⁽¹⁾  USA PATRIOT Act, Pub. L. 107-56, 115 Stat. 272 (2001).

⁽²⁾  The AML Act was enacted as Division F, sections 6001-6511, of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. 116-283, 134 Stat. 3388.

⁽³⁾ See 31 U.S.C. 5311.

⁽⁴⁾  Treasury Order 180-01 (Jan. 14, 2020); see also 31 U.S.C. 310(b)(2)(I) (providing that FinCEN Director "[a]dminister the requirements of subchapter II of chapter 53 of this title, chapter 2 of title I of Public Law 91-508, and section 21 of the Federal Deposit Insurance Act, to the extent delegated such authority by the Secretary.").

⁽⁵⁾  The provision was added to the BSA through Section 352 of the USA PATRIOT Act and authorizes FinCEN to prescribe minimum standards for AML programs and to exempt certain financial institutions from application of those standards. Section 6101(b) of the AML Act amended the provision to include explicit references to terrorism finance and to specify the factors that FinCEN must consider in prescribing minimum standards.

⁽⁶⁾ See 31 U.S.C. 5318(h)(1)(A)-(D).

⁽⁷⁾ See FinCEN, Regulations Regarding Reporting and Recordkeeping Requirements by Casinos, 58 FR 13538 (Mar. 12, 1993). The regulations were codified at 31 CFR 1021.210. Card clubs are included in the casino AML program regulations, and any reference to casinos used in BSA regulations includes card clubs, unless specifically noted. See 31 CFR 1010.100(t)(5)(iii).

⁽⁸⁾ See FinCEN, Anti-Money Laundering Programs for Financial Institutions, 67 FR 21110 (Apr. 29, 2002). The amended regulations are codified at 31 CFR 1021.210(a).

⁽⁹⁾ See FinCEN, Agency Information Collection Activities; Proposed Renewal: Comment Request; Renewal Without Change of Anti-Money Laundering Programs for Certain Financial Institutions, 89 FR 29427 (Apr. 22, 2024).

⁽¹⁰⁾ See FinCEN, Anti-Money Laundering and Countering the Financing of Terrorism Programs NPRM, 89 FR 55428 (July 3, 2024).

⁽¹¹⁾  Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).

⁽¹²⁾  Pursuant to 31 CFR 1021.410(b)(10), casinos must retain a copy of their AML compliance programs.

⁽¹³⁾  Table 1 below sets forth a distribution of the types of casinos covered by this notice.

⁽¹⁴⁾ See FinCEN, Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Anti-Money Laundering Program Requirements for Casinos, 85 FR 83676 (Dec. 22, 2020).

⁽¹⁵⁾ See 31 U.S.C. 5318(h)(1)(A)-(D).

⁽¹⁶⁾  31 CFR 1021.210(b)(1).

⁽¹⁷⁾  31 CFR 1021(b)(2); see also 31 CFR 1021.410(b)(10).

⁽¹⁸⁾  Pursuant to 31 CFR 1021.210(b)(1) and 31 CFR 1021.410(b)(10), respectively, a casino's AML program must be reduced to writing, and the casino must retain a copy of the program.

⁽¹⁹⁾  Pursuant to 31 CFR 1021.210(b)(2)(v), a casino's AML program must include procedures for using all available information to determine: (i) when required by 31 CFR Chapter X, a person's name, address, social security number, and other information, and verification of the same; (ii) the occurrence of any transaction or pattern of transactions required to be reported pursuant to 31 CFR 1021.320; and (iii) whether any record described in subpart D of part 1010 of chapter X must be made and retained. Pursuant to 31 CFR 1021.210(b)(2)(vi), casinos with automated data processing systems must implement AML programs that provide for the use of automated programs to aid in assuring compliance.

⁽²⁰⁾ See supra note 14.

⁽²¹⁾ See supra note 9.

⁽²²⁾  If it becomes necessary to consider how to allocate the burden of Activity D between the activities required by 31 CFR 1021.210(b)(2)(v) and (vi) respectively, FinCEN is of the opinion that (vi) contributes a de minimis burden to the activity. Pursuant to 31 CFR 1021.210(b)(2)(vi), "[f]or casinos that have automated data processing systems," the casino's AML program must provide for "the use of automated programs to aid in assuring compliance." While this may have been a measurable incremental source of burden in the earlier stages of businesses adopting automated compliance programs (particularly in the casino industry), FinCEN believes such programs have since been widely adopted for a variety of sound business reasons independent of FinCEN regulatory requirements. As these programs are now effectively ubiquitous in the industry, FinCEN is of the opinion that they would continue to be used in the absence of the requirement in 31 CFR 1021.210(b)(2)(vi). However, FinCEN solicits comments on whether this is the case, and whether as a result the burden added by (vi) should be regarded as de minimis.

⁽²³⁾ See, e.g., FinCEN and SEC, NPRM Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Advisers, 89 FR 44571 (May 21, 2024); FinCEN, NPRM Anti-Money Laundering and Countering the Financing of Terrorism Programs NPRM, 89 FR 55428 (July 3, 2024); FinCEN, Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of the Customer Identification Program Regulatory Requirements for Certain Financial Institutions, 89 FR 51940 (June 20, 2024); FinCEN, Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Due Diligence Programs for Correspondent Accounts for Foreign Financial Institutions and for Private Banking Accounts, 89 FR 49273, (June 11, 2024).

⁽²⁴⁾ See 31 CFR 1010.430.