Professional gamblers need to be aware of laws regarding money laundering, CTRs (cash transaction reports), and confiscation of cash or casino chips when the holder of the chips is suspected of certain illegal activities. Professional gamblers completely innocent of money laundering or any illegal activities have had their bankrolls and casino chips seized by authorities. Regarding money laundering and CTRs, the law these days makes you guilty until you prove you're innocent.
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Money Laundering, Structuring, and Federal Forfeitures: A Guide for Gamblers

 
confiscation of cash or casino chips currency transaction report
 
LEGAL ISSUES: CONTENTS
card counting lawsuit Tommy Hyland team The Tommy Hyland Team Trial in
    Windsor
    By Arnold Snyder
Professional gamblers lawsuit Las Vegas casinos Interview with Bob Nersesian
    By RWM
James Grosjean's lawsuit against Imperial Palace casino in Las Vegas for false arrest It's Not Paranoia If...
    (Comments on JG's successful
    lawsuit against Imperial Palace)
    By James Grosjean
card counting and the law and confiscation of chips lawsuit A Nevada Court Victory for Counters
    By Robert A. Loeb, Attorney at Law
Missouri outlaws casino barring of blackjack card counters Missouri Outlaws Barring, Institutes
    Countermeasures
    By Robert A. Loeb, Attorney at Law
Fake ID false identification and the law Fake I.D.: A Consumer's Guide
    By Arnold Snyder
Phony ID fake identification and professional gamblers Phony I.D. = Real Risk
    By Andrew S. Blumen, Attorney At Law
blackjack computer and the law Blackjack Computers, Your Ticket to
    the Big House (Part I)
    By Thomas B. Duffy, Attorney At Law
blackjack computer and the law Blackjack Computers, Your Ticket to
    the Big House (Part II)
    By Thomas B. Duffy, Attorney At Law
hole card blackjack play and the law Is Spooking Legal?
    By Arnold Snyder
    (with commentary by Stephen R.
    Minagil, Attorney at Law)
gambling in Las Vegas and the law Nevada Attorney Interviewed
    By Arnold Snyder
casino barring of card counting players, or card counters What To Do If You Are Barred
    By Robert A. Loeb, Attorney At Law
gambling in Las Vegas and the law Is Card Counting Legal?
    By Arnold Snyder
 
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How Not to Launder Money and Get Caught Doing It

By L.J. Winsome
(From Blackjack Forum XVII #3, Fall 1997)
© Blackjack Forum 1997

In the case of federal forfeitures and money laundering, America may be becoming one of the many countries where ó if one fits into one of the myriad "profiles" that indicate drug trafficking or affiliation with drug traffickers ó one is guilty until proven innocent.

America is one of the few countries that taxes its citizens on gambling winnings. Apparently, the honor method of income reporting does not seem to be working. Laws have been put in place to ensure that the government knows who is making how much and where. Judging from the illegal seizures of money from innocent people as well as gamblers that have been depicted on television and in the press, theyíre going overboard in what they deem "suspicious activity."

Recently, I stopped over at the Reno airport on a one-way ticket from an international destination. The day before I had purchased a one-way ticket to San Francisco from Reno for the final leg of my journey. Because of this one-way ticket, I was required to go back to security and have my bags checked, even though I had already put them through the x-ray and walked through the metal detector. I had approximately $30K on me, but luckily I was wearing it.

The guard performed a "dump search." Shampoo bottles were opened, books were rifled through, and every item was taken out of my bag. It was invasive to say the least, and a mere harbinger of what is to come. Iím convinced that if I hadnít been wearing that money, they would have taken it. They could only have been looking for money or drugs, as I had passed the terrorist test when I went through the first time. Under the guise of the "War on Drugs," the American government is turning anyone who can take a look into your private life into a sheriff.

Earlier this year, a player from a large team stuck his carry-on through the x-ray at the Philadelphia airport. The airline x-ray detected approximately 100,000 dollars in cash and casino chips. According to the team leader, the player was later apprehended at OíHare International Airport in Chicago and taken into a back-room.

Two Drug Enforcement Agents confiscated the money. The player said that he tried to explain to them that he was a card counter ó pointing out the chips ó but they just laughed. The team will now have to spend thousands of dollars in attorneyís fees to prove that this player is innocent. Getting the money back will come later, and some of it could be withheld.

This team is large enough and flush enough to handle lawyers and endless bureaucracies in the form of casinos. An example of a team defending themselves against the powers that be is the well-documented Windsor case (Blackjack Forum December í95), where Tommy Hyland took on the province of Ontario.

But it may not be worth it to an average low to middle-stakes player, who has less than $10K to $20K confiscated, to go up against a government agency that has all the time and money in the world. In the long run, it may cost more to get the money back than what was lost in the first place. So, besides always carrying your bankroll on your body, you might consider adopting a new hobby of petitioning your congressman or senator to get to work on returning some of your civil rights.

Title 211 U.S.C ß 881(a)(6) authorizes the forfeiture of:

All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter, except that no property shall be forfeited under this paragraph, to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.

An article in the San Diego Union says:

"So much illicit cash travels down Interstate 5 to Mexico that law enforcement officers have dubbed the stateís main north-south freeway Ďthe cash corridor.í Millions of dollars are confiscated on this route each year during routine traffic stops in places such as Kern and San Bernardino counties, places that are bisected by freeways from other parts of the country. . . .

Typical seizures net between $30,000 and $100,000. . . . Officers are not allowed to pull cars over unless a traffic violation has been committed. . . . It is not illegal to carry large amounts of cash, but currency can legally be seized if prosecutors prove that the money could not have a legitimate source. Federal law allows money from the sale of illegal drugs to be seized and split among the agencies involved in its capture."

The Civil Asset Forfeiture Reform Act (HR 1965), introduced by Congressman Henry Hyde, Chairman of the House Judiciary Committee, is pending in the House of Representatives. Itís stated goal is, "To provide a more just and uniform procedure for Federal civil forfeitures and for other purposes." Those Ďother purposesí are what the non-profit group Forfeiture Endangers Americans Rights (FEAR) are concerned about.

FEAR, formed in New Jersey in 1992 by a group of concerned citizens, seeks an end to the practices of letting the seizing agencies benefit from the proceeds of property seized, and of letting federal agencies adopt state seizures. According to a spokesperson from FEAR, "Things are getting worse on the forfeiture front. The Hyde/ Conyers bill that we supported ó HR 1835 ó was gutted by the House Judiciary Committee, with help from the Justice Department, and was renamed HR 1965. Not only does it make the procedures worse than under present law, but it adds a lot of new forfeitable "offenses," and creates procedures allowing foreign governments to forfeit U.S. property! These provisions are alarming."

At a late afternoon session, entitled "Money Laundering," at the 10th International Conference on Gambling and Risk-Taking that took place in early June in Montreal, a representative from the Treasury Department explained how the U.S. government had turned the funny little Saturday morning cartoon characters called smurfs into the crime that the Treasury Department is attacking with the zealotry of the X-Men.

"Smurfing" or "structuring" is what the treasury department is afraid of from gamblers, said Ed Djinis from the US Department of the Treasury, Financial Crimes Enforcement Network, or at least people masquerading as gamblers. According to Chicago attorney Bob Loeb presently working on an illegal forfeiture case, often when suspected drug traffickers are caught with large unexplained sums of money, they claim that itís gambling winnings, so Treasury Department or DEA officials become inured to this as a viable explanation for the money.

Itís almost an urban legend by now, but every gambler knows that 90% of all $100 bills have traces of cocaine on them. Unfortunately, casino chips donít leave a tell-tale residue.

Djinis spoke at this conference looking every inch the government bureaucrat: his suit was gray, his tie was blue, and he repeated every concept he made, no matter how uninteresting. His one salient point, however, was a definition of what constitutes "smurfing."

"If someone engages in currency transactions just below the currency threshold for reporting, it is called structuring or smurfing," said Djinis. "In one instance it may not warrant much attention, but if the customer does this in a repeated fashion, either in conducting numerous transactions at the cage, or various buy-ins at numerous tables, that would constitute structuring."

Djinis pointed out that casinos provide many of the services that banks and brokerage houses do, and were necessary in providing stopping points along the audit trail. Therefore they were uniquely positioned to watch for and report on currency transactions that looked suspicious.

Casinos have complied with the Bank Secrecy Act since 1986. It basically requires each casino to secure information on the patron such as the name and social security number. Itís then the casinos obligation to report that information to the government when the patron performs a transaction of over $10K.

An MGM Grand Casino representative, John Donnelly from the firm Levine, Staller, Sklar, Chan, Brodsky & Donnelly, disagreed with the fedsí explanation of the law the moment he took the podium. "Money laundering is not what is at issue. What is at issue is revenue enhancement for the Internal Revenue and Treasury." He added that the Treasury Department didnít believe the fedsí position either.

Donnelly explained that casinos are not the appropriate vehicles for money laundering because of the constant surveillance and the knowledge of what is going on at the tables. He pointed out that there has only been one criminal prosecution that has used currency transaction reporting out of a casino, despite that millions of reports that end up being filed in the Treasury Departments depository in Detroit, Michigan.

Djinis concurred, "Looking for suspicious activity and reporting it to the government puts the casino in the position of becoming a government agency, but the train has left the station and the government cannot do this in a vacuum." Moderator of the panel, Frederic Gushin, Spectrum Gaming Group, New Jersey, disagreed that casinos are not good places to wash cash.

"We saw in Atlantic City, prior to 1986, many instances where criminals were attempting to launder money," said Gushin.

Gushin related an incident of an LA bank-robber who brought a million dollars into a casino, documented in the book, Running Scared: The Life and Treacherous Times of Las Vegas Casino King Steve Wynn. When the robber brought the money to the cage all other activity stopped, except counting out the money. According to Djinis the more a customer uses a casino as a surrogate financial institution and less a source of entertainment, the more regulations will be imposed on it.

Itís clear that the casinos are loathe to make themselves a beacon on the audit trail, but thatís countered by the fees and commissions that a casino can charge for banking services, as well as the undisguised grin on your casino hostís face when you put more than 10K on deposit. Casinos want to perform these services, and they have to report them when they do. It seems that the train is careening down the track. The casinos have been deputized.

It also appears that regulations are going to become stricter. Here are two summaries of regulations that are pending addendums to the Bank Secrecy Act. They are excerpted from the Federal Register Vol. 62, Num. 98, May 21, 1997:

The Financial Crimes Enforcement Network ("FinCEN") is proposing to amend the Bank Secrecy Act regulations to require money transmitter and issuers, sellers and redeemers, of money orders and travelerís checks to report suspicious transactions involving at least $500 in funds or other assets. The proposal is a further step-up in the creation of a comprehensive system (to which banks are already subject) for the reporting of suspicious transactions by financial institutions. Such a system is a core component of the counter money laundering strategy of the Department of Treasury.

The Financial Crimes Enforcement Network ("FinCEN") is proposing to amend the regulations implementing the Bank Secrecy Act to require money transmitters and their agents to report and retain records of transactions in currency or monetary instruments of at least $750 but not more than $10,000 in connection with the transmission or other transfer of funds to any person outside the United States, and to verify the identity of senders of such transmissions or transfers. The proposed rule is intended to address the misuse of money transmitters by money launderers and is in addition to existing rule requiring currency transaction reports for amounts exceeding $10,000.

The key that brings the earlier described airport horror stories and the seemingly unrelated late afternoon conference on money laundering together is the term "revenue enhancement." The government wants to take your money, preferably in the form of taxes. Taxes require that your income be tracked. If that doesnít work, the law allows agents to seize and keep money when itís derived from drug dealing. CTRís and the deputation of these various gatekeepers are attempts to track those who function outside the system.

The situation thus may be that you may want to allow CTRís to be filed on you, just in case the money is confiscated. Of course, this will require that the gambler having the CTR filed on him pay taxes, and that is something some gamblers avoid like the plague. Many pros pay their taxes honestly, but part of why the lifestyle is so attractive to some is that one is free of the middle-class trap. The thinking is, if one has to pay taxes on oneís winnings, one may as well get a real job.

At the Montreal Gambling Conference, Max Rubin, author of Comp City, took the microphone during the question and answer period of the "Money Laundering" seminar to ask some specific questions about what constitutes smurfing.

"Does there have to be intent to evade taxes, or intent to evade the Treasury Department?" asked Rubin.

Rubin explained that card counters often stay under the casino radar by not showing ID and using different names. Obviously, when one fills out a CTR, one is required to show ID, so big money card counters might avoid doing it when using an alias.

"I know guys who pay hundreds of thousands in taxes," he said, "but they donít want the casinos to know who they are. Is that a crime?"

Djinis answered: "No, itís probably not. If the intention is to evade detection by the casino, but not evade our reporting requirements, I donít see a crime by the customer."

It could be a catch 22, however, because if forced, a card counter would have to prove he was a card counter, and the only way to do that may be to have CTRís filed in a casino.

If you would like more information on the Bank Secrecy Act or federal forfeiture regulations, you can find it on the internet at:
http://www.netrunner.net/~alert/document.html. This site was an invaluable source in the writing of this article, and it is constantly being updated as regulations are gutted or amended. ♠

For more information on moving money around for gambling plays without triggering suspicion of money laundering and the like, see Blackjack Blueprint: How to Play Like a Pro... Part-Time (Gambling Theories Methods) by Rick Blaine, a former teammate of Arnold Snyder's.

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  Misapplicaton of Money-Laundering Laws to Cash Legally Carried by Professional Gamblers The feds are screwing up again seizing professional gamblers' bankrolls and winnings due to misapplication of federal money-laundering laws. Federal forfeitures and money laundering laws are the only instances of federal law where you are guilty until proven innocent. Many card counters run afoul of money laundering regulations simply for trying to hide their identity from casinos, to protect their livelihoods.

I