Due to recurring violations of anti-money-laundering (AML) regulations, the Financial Crimes Enforcement Network (FinCEN) fined the Lake Elsinore Hotel and Casino in California $900,000. The fact that this is FinCEN’s first major enforcement action against a casino in six years highlights the federal agency’s efforts to police financial laws and promote transparency.
Longstanding AML Gaps Exposed
The fine aims to address Lake Elsinore’s alleged disregard for essential AML controls under the Bank Secrecy Act (BSA). A FinCEN investigation found that, between September 2014 and early 2019, the casino routinely failed to submit essential Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs). These reports are critical for tracking unusual or potentially illegal transactions within the financial sector. FinCEN’s findings suggest that Lake Elsinore’s operational structure contributed significantly to these compliance issues.
Lake Elsinore’s compliance oversight team included senior executives without formal training in AML or BSA protocols. FinCEN noted that putting an inexperienced general manager and chief operations officer in charge of compliance left critical gaps. This oversight led to unreported transactions that could have alerted authorities to potential money laundering and financial crimes. Consequently, the absence of required AML measures hindered law enforcement’s access to critical information on suspicious transactions.
FinCEN Director Warns of Industry-Wide Responsibility
FinCEN Director Andrea Gacki highlighted the importance of BSA compliance, pointing out that Lake Elsinore’s neglect “put both its customers and the U.S. financial system at risk.” She emphasized that BSA rules are non-negotiable for all financial institutions, including gaming establishments, regardless of their size or business scope.
Gacki stated, “Lake Elsinore operated for years without the most basic AML controls, putting its customers and the US financial system at risk and denying law enforcement information on suspicious activity. This action should serve as a reminder that all financial institutions—regardless of their type or size—must comply with their obligations under the BSA and FinCEN’s regulations.”
Alongside the fine, Lake Elsinore is required to make immediate improvements to its AML protocols, including hiring an independent AML compliance officer approved by FinCEN. This collaboration between FinCEN and the California Department of Justice’s Bureau of Gambling Control is the first of its kind, and both agencies hope to set an example for California’s expanding gaming sector. Should Lake Elsinore successfully implement these reforms, FinCEN has agreed to reduce the penalty by $50,000, lowering the total to $850,000.
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