Financial Crimes Enforcement Network; Amendments to Bank Secrecy Act Regulations Regarding Casino Recordkeeping and Reporting Requirements, 35008-35013 [E7-12332]

Agencies

• DEPARTMENT OF THE TREASURY
• Department of Treasury

[Federal Register Volume 72, Number 122 (Tuesday, June 26, 2007)]
[Rules and Regulations]
[Pages 35008-35013]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-12332]


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DEPARTMENT OF THE TREASURY

31 CFR Part 103

RIN 1506-AA84


 Financial Crimes Enforcement Network; Amendments to Bank Secrecy 
Act Regulations Regarding Casino Recordkeeping and Reporting 
Requirements

AGENCY: Financial Crimes Enforcement Network, Department of the 
Treasury.

ACTION: Final rule.

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SUMMARY: The Financial Crimes Enforcement Network (FinCEN) is issuing 
this final rule to amend the Bank Secrecy Act regulation requiring 
casinos to report transactions in currency. Specifically, the 
amendments exempt, as reportable transactions in currency, jackpots 
from slot machines and video lottery terminals, as well as 
transactions, under certain conditions, involving certain money plays 
and bills inserted into electronic gaming devices. We also are 
exempting certain transactions between casinos and currency dealers or 
exchangers, and casinos and check cashers. Finally, the amendments 
provide additional examples of ``cash in'' and ``cash out'' 
transactions.

DATES: Effective Date: June 26, 2007.

FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs

[[Page 35009]]

Division, Financial Crimes Enforcement Network, (800) 949-2732.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory and Regulatory Background

    The Director of FinCEN is the delegated administrator of the Bank 
Secrecy Act.\1\ The Bank Secrecy Act authorizes the Director to issue 
regulations that require all financial institutions defined as such in 
the Bank Secrecy Act to maintain or file certain reports or records 
that have been determined to have a high degree of usefulness in 
criminal, tax, or regulatory investigations or proceedings, or in the 
conduct of intelligence or counter-intelligence activities, including 
analysis, to protect against international terrorism and to prevent, 
deter, and detect money laundering.\2\
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    \1\ The statute generally referred to as the ``Bank Secrecy 
Act,'' Titles I and II of Pub. L. 91-508, as amended, is codified at 
12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316-
5332.
    \2\ Language expanding the scope of the Bank Secrecy Act to 
intelligence or counter-intelligence activities to protect against 
international terrorism was added by section 358 of the Uniting and 
Strengthening America by Providing Appropriate Tools Required to 
Intercept and Obstruct Terrorism (``USA PATRIOT'') Act of 2001, Pub. 
L. 107-56 (Oct. 26, 2001).
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    Casinos are cash-intensive businesses that also offer a broad array 
of financial services. These services include providing customer 
deposit or credit accounts, transmitting and receiving funds transfers 
directly from other financial institutions, check cashing, and currency 
exchanging. Consequently, casinos offer services that are similar to 
and may serve as substitutes for services ordinarily provided by 
depository institutions and certain non-bank financial institutions. As 
such, casinos are vulnerable to abuse by money launderers, terrorist 
financiers, and tax evaders.
    In general, state-licensed casinos were made subject to the Bank 
Secrecy Act by regulation in 1985.\3\ The 1985 rulemaking was based on 
the authority of the Secretary of the Treasury to designate as 
financial institutions for Bank Secrecy Act purposes: (i) Businesses 
that engage in activities that are ``similar to, related to, or a 
substitute for'' the activities of businesses defined as ``financial 
institutions'' \4\ in the Bank Secrecy Act and (ii) other businesses 
``whose cash transactions have a high degree of usefulness in criminal, 
tax, or regulatory matters.'' \5\ Congress later explicitly added 
casinos and other gaming establishments to the definition of 
``financial institution'' in the Bank Secrecy Act.\6\ Casinos 
authorized to conduct business under the Indian Gaming Regulatory Act 
became subject to the Bank Secrecy Act by regulation in 1996,\7\ and 
card clubs became subject to the Bank Secrecy Act by regulation in 
1998.\8\
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    \3\ See 50 FR 5065 (Feb. 6, 1985). Casinos with gross annual 
gaming revenue not exceeding $1 million were, and continue to be, 
excluded from requirements otherwise applicable to casinos and card 
clubs.
    \4\ The Bank Secrecy Act defines the term ``financial 
institution'' at 31 U.S.C. 5312(a)(2).
    \5\ See 31 U.S.C. 5312(a)(2)(Y) and (Z).
    \6\ Section 409 of the Money Laundering Suppression Act of 1994, 
Title IV of the Riegle Community Development and Regulatory 
Improvement Act of 1994, Pub. L. 103-325. The definition of 
``financial institution'' currently reads in relevant part as 
follows:
    (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).
    \7\ See 61 FR 7054 (Feb. 23, 1996).
    \8\ See 63 FR 1919 (Jan. 13, 1998). Card clubs generally are 
subject to the same rules as casinos, unless a different treatment 
for card clubs is explicitly stated in our rules. Therefore, for 
purposes of this rulemaking, and unless the context indicates 
otherwise, the term ``casino'' refers to both casinos and to card 
clubs.
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B. Casino Currency Transaction Reporting Requirements

    Regulations under the Bank Secrecy Act define a ``transaction in 
currency'' as any transaction ``involving the physical transfer of 
currency from one person to another.'' \9\ Casinos must report each 
transaction in currency involving ``cash in'' or ``cash out'' of more 
than $10,000,\10\ and are required to aggregate transactions in 
currency (that is, treat the transactions as a single transaction) if 
the casino has knowledge that the transactions are conducted by or on 
behalf of the same person and result in cash in or cash out of more 
than $10,000 during any gaming day.\11\ The rule requiring casinos to 
report transactions in currency also lists examples of transactions in 
currency involving cash in and cash out.\12\
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    \9\ See 31 CFR 103.11(ii)(2).
    \10\ See 31 CFR 103.22(b)(2).
    \11\ See 31 CFR 103.22(c)(3).
    \12\ See 31 CFR 103.22(b)(2)(i) and (ii). The list is not 
exhaustive. The terms cash in and cash out refer to direction--
currency to the casino in the case of cash in transactions, and 
currency from the casino in the case of cash out transactions.
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    Casinos must report transactions in currency by filing FinCEN Form 
103--``Currency Transaction Report by Casinos.'' A casino must record 
on the Currency Transaction Report identifying information for persons 
involved in the transaction, verify identifying information, and 
include information describing the transaction.\13\ In addition, a 
casino must file the report within 15 days following the date of the 
reportable transaction and retain a copy of the report for a period of 
five years from the date of the currency transaction(s).\14\
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    \13\ See FinCEN Form 103; 31 CFR 103.27(d) and 103.28.
    \14\ FinCEN Form 103 must be sent either through regular mail 
within 15 calendar days from the date of the transaction(s) (see 31 
CFR 103.27) to the IRS Detroit Computing Center's address found in 
the instructions to this form or electronically within 25 calendar 
days from the date of the currency transaction(s) through FinCEN's 
BSA Direct E-Filing System.
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II. Notice of Proposed Rulemaking

    The final rule contained in this document is based on the Notice of 
Proposed Rulemaking published March 21, 2006 (``Notice'').\15\ The 
Notice proposed to exempt from coverage of the rule requiring casinos 
to file Currency Transaction Reports: (i) Jackpots from slot machines 
and video lottery terminals, (ii) certain transactions between casinos 
and currency dealers or exchangers, and (iii) certain transactions 
between casinos and check cashers. Also, the Notice proposed to provide 
additional examples of cash in and cash out transactions.
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    \15\ See 71 FR 14129 (March 21, 2006).
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III. Comments on the Notice--Overview and General Issues

    The comment period for the Notice of Proposed Rulemaking ended on 
May 22, 2006. We received a total of 16 comment letters. Of these, five 
were submitted by casinos, two by casino trade associations, seven by 
agencies representing state or tribal governments, one by a casino 
gaming equipment manufacturer, and one by an agency of the United 
States Government.
    There was strong support for exempting the following transactions 
from the requirement to file Currency Transaction Reports: (i) Jackpots 
from slot machines and video lottery terminals, (ii) certain 
transactions between casinos and currency dealers or exchangers, and 
(iii) certain transactions between casinos and check cashers. In 
addition, commenters were generally supportive of nine of the eleven 
additional examples of cash in and cash out transactions.
    The following two proposed amendments received extensive comment: 
(i) The addition of ``money plays'' as ``bets of currency'' and

[[Page 35010]]

therefore as examples of cash in transactions; and (ii) the addition of 
bills inserted into electronic gaming devices as an example of a cash 
in transaction. A discussion of the comments follows in the section-by-
section analysis below.

IV. Section-by-Section Analysis

A. Jackpots From Slot Machines and Video Lottery Terminals--
103.22(b)(2)(ii)(E) and 103.22(b)(2)(iii)(D)

    As we explained in the Notice, jackpots from slot machines and 
video lottery terminals account for a significant portion of Currency 
Transaction Reports filed by casinos. Absent fraud or abuse of the slot 
machine or video lottery terminal, a customer \16\ who wins more than 
$10,000 in jackpots at a slot machine or video lottery terminal 
generally will have won those funds solely because of the workings of 
the random number generator in the slot machine or in a central 
computer that is networked with the video lottery terminal. 
Accordingly, the jackpots are not likely to form part of a scheme to 
launder funds through the casino. Moreover, casinos are required to 
file federal income tax forms with the Internal Revenue Service on 
jackpots of $1,200 or more; therefore, jackpots from slot machines and 
video terminals are not likely to form part of a scheme to evade taxes.
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    \16\ See 31 CFR 103.64(b)(3).
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    The commenters agreed with modifying 103.22(b)(2) to delete the 
reference to slot jackpots as reportable cash out transactions in 
currency. In addition, the commenters were nearly unanimous in 
asserting that this deletion would have no negative impact on law 
enforcement investigations.
    We are adopting the proposed amendments regarding slot machine and 
video terminal jackpots without change. Thus, the final rule amends 
103.22(b)(2)(ii)(E) by removing the reference to ``slot jackpots'' from 
the examples of cash out transactions, and adding paragraph 
103.22(b)(2)(iii)(D), which exempts jackpots from slot machines and 
video lottery terminals as reportable cash out transactions.

B. Transactions With Currency Dealers or Exchangers and Check Cashers--
103.22(b)(2)(iii)(A)

    As described above, existing regulations require a casino to file a 
Currency Transaction Report for cash in or cash out transactions in 
excess of $10,000 conducted between casinos and currency dealers or 
exchangers, and between casinos and check cashers.\17\ In the Notice, 
FinCEN stated its view that as long as these currency transactions are 
conducted pursuant to a contractual or other arrangement with a casino 
covering those services in sections 103.22(b)(2)(i)(H), 
103.22(b)(2)(ii)(G), and 103.22(b)(2)(ii)(H), these currency 
transactions should not be subject to a casino's currency transaction 
reporting requirements. Requiring a casino to file Currency Transaction 
Reports for these transactions, which do not pose a significant money 
laundering risk, would result in duplicative reports, since currency 
dealers or exchangers and check cashers are already required to file 
Currency Transaction Reports on them.\18\ Accordingly, we believe that 
Currency Transaction Reports filed by casinos on these transactions do 
not have a high degree of usefulness in criminal, tax, or regulatory 
investigations or proceedings.
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    \17\ Since July 1997, the instructions to FinCEN Form 103 have 
included language excluding transactions with currency dealers or 
exchangers, as well as transactions with check checkers. The 
language will be revised to reflect the language in 
103.22(b)(2)(iii)(A).
    \18\ This amendment does not affect the obligations of currency 
dealers or exchangers and check cashers under the rule requiring 
these businesses to file Currency Transaction Reports. See 31 CFR 
103.22(b)(2).
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    Commenters generally supported the proposed amendment,\19\ and we 
are adopting it without change. Thus, the final rule amends 
103.22(b)(2) by exempting certain transactions with currency dealers or 
exchangers and check cashers as reportable transactions for currency 
transaction reporting purposes.
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    \19\ One commenter suggested that FinCEN consider additional 
exclusions for transactions between casinos and other entities that 
also may result in duplicative filings. Such transactions are not 
addressed in the final rule.
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C. Other Amendments

    1. Purchases of chips, tokens, and other gaming instruments--
103.22(b)(2)(i)(A). We proposed to amend 103.22(b)(2)(i)(A) by removing 
the reference to ``plaques,'' another name for a high value chip, and 
including a reference to ``other gaming instruments.'' A ``gaming 
instrument'' would include any casino-issued financial product that is 
used to facilitate a gaming transaction (e.g., high dollar denomination 
plaques used in playing baccarat games and cheques used in playing 
roulette), including those associated with a particular customer.
    Fewer than half of the commenters addressed this proposal, but they 
agreed generally with broadening the category of casino-issued 
financial products that facilitate gaming transactions. One commenter 
asked for clarification about whether the purchase of a casino ``smart 
card'' would represent the purchase of a gaming instrument. If the 
customer must establish a personal identification number (PIN) and an 
account number prior to receiving a casino smart card, it is FinCEN's 
view that the casino should treat the transaction as a form of ``front 
money deposit,'' and not the purchase of a gaming instrument.\20\ 
FinCEN is adopting the proposed amendment without change.
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    \20\ See 31 CFR 103.22(b)(2)(i)(B).
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    2. Bets of currency, including money plays--103.22(b)(2)(i)(E). 
Under the existing regulations, a bet of currency is listed as an 
example of a cash in transaction.\21\ Our Notice included an explicit 
reference to money plays as bets of currency. In a money play, a 
customer places currency on the table prior to the beginning of play. 
The dealer does not exchange the currency for chips, and the currency 
is not placed in a table ``drop-box'' unless the customer loses the 
wager. Our Notice stated that a money play is a transaction in currency 
involving cash in regardless of whether the customer wins or loses the 
wager.\22\ Under current non-federal regulations, money plays are only 
permitted in Mississippi, Nevada, and certain gaming tribal 
jurisdictions. Within those few jurisdictions, money plays represent a 
comparatively small number of bets.
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    \21\ See 31 CFR 103.22(b)(2)(i)(E).
    \22\ We reached the same conclusion in FinCEN Ruling FIN-2006-
R002--A Cash Wager on Table Game Play Represents a ``Bet of 
Currency,'' (March 24, 2006).
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    Most of the comments on this proposed amendment disagreed with 
including money plays as an example of bets of currency that are 
reportable as cash in transactions. Commenters argued that a money play 
is a transaction in currency only to the extent the customer loses the 
wager and the dealer places the currency in a drop-box. Commenters 
contended that when a customer wins a money play there occurs no 
physical transfer of currency--from the customer to the casino, or from 
the casino to the customer. Commenters also argued that a money play in 
which the customer wins the wager involves no conversion of funds and 
therefore poses no risk of money laundering.
    Commenters also noted that treating money plays as bets of currency 
could result in Currency Transaction Reports that they believe are 
misleading. For example, if a customer wins a money play, the currency 
wagered would be returned to the customer and also

[[Page 35011]]

treated as a cash out transaction even though the transaction involved 
the same currency the customer used to make the money play. Similarly, 
if a customer wins a money play at a table and re-bets the same 
currency at the table, two cash in transactions that may need to be 
aggregated would occur, with the result that the customer would appear 
to have brought more money into the casino than in fact is the case.
    FinCEN continues to maintain that money plays at a table game are 
bets of currency, regardless of whether the customer wins, and that 
these are cash in transactions under Bank Secrecy Act regulations once 
the customer can no longer retrieve the bet.\23\ We are, however, 
exempting money plays to the extent the customer wagers the same 
physical currency that the customer wagered on a prior money play on 
the same table game, and the customer has not departed from the table. 
We have also concluded that when a customer wins a money play wager, 
the currency won would be a cash out transaction. However, since the 
currency used to place the wager is the same physical currency received 
when the customer wins the bet, we are exempting such cash out 
transactions from the currency transaction reporting requirements.
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    \23\ Even though a money play may not involve the conversion of 
funds and therefore poses no risk of money laundering, information 
about large amounts of currency wagered in money plays can be highly 
useful in other criminal investigations or in tax investigations.
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    Therefore, the final rule amends 103.22(b)(2)(i)(E), as proposed, 
to include money plays as bets of currency. Further, the final rule 
amends proposed 103.22(b)(2)(iii) by excluding from cash out 
transactions the currency won in a money play when that currency is the 
same as the currency wagered in the money play. In addition, the final 
rule excludes from cash in transactions, currency wagered in a money 
play to the extent it is the same physical currency the customer 
previously wagered in a money play on the same table game without 
leaving the table.\24\
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    \24\ Thus, for example, if a customer wagers $4,000 in currency 
on a table game, wins, and immediately rebets the currency, there is 
no aggregation of those bets. The exemption is not, however, 
intended to exclude from currency transaction reporting an amount 
over $10,000 simply because the customer previously bet the 
currency. Therefore, if a customer bets $4,000 in currency on a 
table game, wins, and immediately re-bets the $4,000 together with 
an additional $7,000 in currency, for a total wager of $11,000, the 
customer would be treated as making a single transaction involving 
more than $10,000. This means that when a customer increases a 
subsequent cash bet, at the same table game without departing, the 
increase in the amount of the currency bet would represent a new bet 
of currency and a transaction in currency.
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    3. Bills inserted into electronic gaming devices--
103.22(b)(2)(i)(I). In the Notice, we proposed to amend 
103.22(b)(2)(i)(I) by including bills inserted into electronic gaming 
devices as an example of a cash in transaction. ``Electronic gaming 
devices'' would include slot machines and video lottery terminals.
    This proposal generated the most comments. All commenters on this 
proposal, except for one, asserted that slot machines and other 
electronic gaming devices pose a low risk for money laundering activity 
and that FinCEN's proposal to include bills inserted into electronic 
gaming devices as a type of reportable cash in transaction should be 
rejected.
    Most commenters observed that, contrary to FinCEN's assertion, 
existing business practices and records would not adequately report 
bills inserted into electronic devices, in part because most systems 
capture play only for customers who are using a club card.\25\ 
According to the commenters, it is not the industry norm to require 
customers to be cardholders in order to play slot machines. In fact, 
several commenters indicated that uncarded play represents between 40-
50 percent of all play. The majority of commenters also pointed out 
that the data gathered by tracking the play of cardholders may be 
misleading, incomplete and inaccurate for several reasons. First, there 
is no way for casinos to ensure that a patron is actually the person 
using his or her card, since patrons may share cards with friends and 
family, or inadvertently leave a card in a machine resulting in the 
next player's bills being attributed incorrectly to the previous 
patron.\26\ According to the commenters, this situation may result in 
flawed per-customer totals and lead to the filing of erroneous Currency 
Transaction Reports. Second, even for those casinos that have systems 
in place to track slot play, commenters indicate that the industry 
standard is to capture a total amount of cash in per player, which 
includes not just bills inserted but also any credits earned. The 
commenters as a group (including a company that designs, produces, 
programs, installs, services and operates gaming machines in the United 
States) asserted that the development of a system to capture the data 
sought would take significant time and resources. In addition, the 
commenters observed that such a system would deter money laundering by 
cardholders only, a group unlikely to engage in money laundering 
activity given that they must provide identification as a prerequisite 
to obtaining a card.
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    \25\ A club card (also called ``player card'') is a card issued 
by a casino to customers who wish to establish an account with and 
become members of that casino's ``player club.'' Such cards, aside 
from serving as marketing devices, allow casinos to track the play 
associated with the card in exchange for which the cardholder is 
eligible for certain privileges and/or rewards. To become a member 
of a player club, a customer must provide or present identification. 
The customer's computerized slot account record typically contains 
the customer's name, permanent address, date of birth, and sometimes 
additional identification information.
    \26\ While casinos may not be able to ensure that customers do 
not deliberately or intentionally share slot or club cards, casinos 
may have strong reasons independent of the Bank Secrecy Act to 
prevent such sharing. Casinos often rely on slot or club cards as 
internal marketing tools to identify customers who engage in 
frequent or substantial gaming activity, and to encourage continued 
patronage through the awarding of ``complimentaries.'' It is 
FinCEN's understanding that many casinos, in fact, have policies 
that prohibit the sharing of slot or club cards.
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    Several commenters noted that, while electronic gaming devices 
generally present low risk for money laundering activity to begin with 
(given the relatively labor-intensive process of inserting bills one at 
a time), potential safeguards already exist to prevent such activity. 
For example, according to the commenters, casino personnel are already 
trained to file a Suspicious Activity Report in such situations or in 
situations where a customer appears to be ``fast-feeding'' a machine.
    Several commenters also expressed concern that the proposal would 
generate confusion when compared with guidance issued by FinCEN in 
February 2005 regarding the ``knowledge'' requirement.\27\ One 
commenter requested clarification from FinCEN regarding the knowledge 
requirement and suggested that FinCEN limit the knowledge of 
transactions to ``contemporaneous knowledge,'' with the result that a 
transaction would be reportable if an employee is aware of the activity 
as it is happening. Other commenters observed that even casinos that 
are able to track data associated with electronic gaming devices still 
will not have ``knowledge'' that a player has inserted currency into a 
machine because casino data systems do not generate a record of player 
identity and the amount of currency inserted.
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    \27\ See FinCEN Ruling 2005-1--Currency Transaction Reporting: 
Aggregation by Casinos at Slot Machines, (Feb. 7, 2005) (``FinCEN 
Ruling 2005-1'').
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    We note that the amendment would not have changed the existing 
obligations of casinos to report currency transactions. Under our 
existing rules, customers inserting currency into electronic gaming 
devices are conducting ``cash in'' transactions. Further, the amendment 
would not have

[[Page 35012]]

created any new recordkeeping or aggregation requirements.\28\ For 
purposes of determining whether to aggregate multiple transactions 
involving the insertion of currency into slot machines and other 
electronic gaming devices and file Currency Transaction Reports, the 
existing knowledge standard continues to apply. Under 31 CFR 
103.22(c)(3) multiple transactions are treated as a single transaction 
if the casino has knowledge that the transactions are by or on behalf 
of any person and result in cash in totaling more than $10,000 during 
any gaming day. A casino has knowledge if its officers, directors, or 
employees have knowledge that multiple currency transactions have 
occurred, including knowledge from examining records which contain 
information that such multiple currency transactions have occurred. As 
explained in FinCEN Ruling 2005-1, the mere existence of information in 
the records would not represent knowledge of the information by the 
casino; rather an officer, director, or employee must have knowledge of 
the information, which could be obtained by observation of a patron's 
activity or by examination of the casino's records.\29\
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    \28\ Thus, for example, the proposal would not have required 
casinos to create multiple transaction logs or develop or upgrade 
systems for processing or capturing information.
    \29\ Moreover, as we described in FinCEN Ruling 2005-1, a casino 
could gain knowledge for currency transaction reporting purposes in 
the course of complying with its other obligations under the Bank 
Secrecy Act. (``[K]nowledge for purposes of 31 CFR 103.22(c)(3) 
includes knowledge acquired in complying with other requirements 
under the Bank Secrecy Act--including the requirement to report 
suspicious transactions, and requirements that related to Bank 
Secrecy Act compliance or anti-money laundering programs.'')
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    Accordingly, the final rule retains the specific reference to 
``bills inserted into electronic gaming devices'' as an example of cash 
in transactions. However, the final rule expressly exempts from 
reporting requirements with respect to multiple transactions the 
insertion of currency into an electronic gaming device unless the 
casino has knowledge that this activity gives rise to a reportable 
currency transaction, in which case this exemption would not apply.
    4. Redemptions of chips, tokens, tickets and other gaming 
instruments--103.22(b)(2)(ii)(A). We proposed to amend 
103.22(b)(2)(ii)(A) by removing the reference to plaques and including 
a reference to ``tickets and other gaming instruments.'' A ``ticket'' 
is a document issued by a slot machine, video lottery terminal, or a 
pari-mutuel clerk to a customer as a record of either a wager or the 
insertion or transfer of funds.\30\ A customer can wager a ticket at a 
machine or terminal that accepts tickets, or redeem a ticket for 
currency at a cage, slot booth, redemption kiosk, or pari-mutuel 
window. A gaming instrument would encompass any casino-issued financial 
product that is used to facilitate a gaming transaction.
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    \30\ Tickets are voucher slips printed with the name and the 
address of the gaming establishment, the stated monetary value of 
the ticket, date and time, number or other information identifying 
the machine or terminal, ticket number, and a unique bar code. 
Tickets are a casino bearer ``IOU'' instrument. Slot machines or 
video lottery terminals that print tickets are commonly known as 
``ticket in/ticket out'' or ``TITO.''
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    We received six comments on the proposal. Only one commenter 
opposed the proposal. The commenter opposing the proposal raised 
concerns relating to the identification of patrons that redeem tickets 
at kiosks or terminals.\31\ The commenter's concerns notwithstanding, 
the amendment would not have changed the obligations of casinos under 
our rules, and we are adopting the amendment as proposed.
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    \31\ Many casinos offer multi-function customer kiosk machines, 
connected to a gateway or kiosk server, that can perform a variety 
of financial transactions, such as redeeming slot machine/video 
lottery tickets for currency, exchanging U.S. currency for U.S. 
currency (i.e., breaking bills or paper money), redeeming player 
slot club points, and initiating electronic transfers of money to or 
from a wagering account including currency withdrawals on automated 
teller machines. It is also known as a ``redemption kiosk.'' The 
redemption of tickets at kiosks or terminals is a cash out 
transaction to the extent funds are redeemed in the form of 
currency. While the tickets redeemed at kiosks or terminals do not 
contain the customer's name or any account number, it is FinCEN's 
understanding that customers usually are limited to redeeming 
tickets valued at no more than $3,000 at a kiosk or terminal.
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    5. Payments by a casino to a customer based on receipt of funds 
through wire transfers--103.22(b)(2)(ii)(F). We proposed to amend 
103.22(b)(2)(ii)(F) pertaining to payments in currency by a casino to a 
customer based on receipt of funds through a wire transfer. 
Specifically, we proposed to delete the phrase ``for credit to a 
customer'' because the reference to credit for this type of cash 
transaction has been confusing for some casinos. We received one 
comment to this amendment, which agreed with the revision. We are, 
therefore, adopting the amendment as proposed.
    6. Travel and complimentary expenses and gaming incentives--
103.22(b)(2)(ii)(I). In the Notice, we proposed to amend 
103.22(b)(2)(ii)(I) by replacing the term ``entertainment'' with the 
term ``complimentary,'' \32\ and by adding the phrase ``gaming 
incentives.''
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    \32\ Although complimentary items typically are goods or 
services that a casino gives to a customer, at reduced or no cost, 
based on significant play, they can also be in the form of currency.
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    Most of the comments on this amendment agreed with the 
revision.\33\ One commenter, however, argued that the revision was 
unnecessary because travel and complimentary expenses, which according 
to the commenter are already regulated by state and tribal authorities, 
present little opportunity for money laundering, tax evasion, or 
terrorist financing. While it is true that these expenses also are 
regulated at the state and tribal level, many transactions involving 
casinos that we regulate are regulated by other governmental 
authorities. In addition, we disagree that the risks associated with 
travel and complimentary expenses are as minimal as the commenter 
asserts. FinCEN is, therefore, adopting the amendment as it was 
proposed in keeping with our stated intention to update and clarify the 
categories of reportable cash out transactions.
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    \33\ One commenter asked for a clarification of the exclusion of 
complimentary player meals, coupons, and redemption of club points 
for merchandise. As long as a casino does not provide currency to 
customers that have player rating or slot club accounts for 
purchasing meals or merchandise, or redeeming coupons, then these 
redemptions are exempted from currency transaction reporting 
requirements.
---------------------------------------------------------------------------

    7. Payments for tournaments, contests, and other promotions--
103.22(b)(2)(ii)(J). In the Notice, we proposed to amend 
103.22(b)(2)(ii)(J) by adding ``payments for tournaments, contests, or 
other promotions'' as examples of cash out transactions.
    Most of the comments on this amendment also agreed with the 
revision. One commenter, however, argued that the addition of this 
example was unjustified. According to the commenter, there is a small 
likelihood that tournaments, contests, or promotions would factor into 
any scheme to launder money, evade taxes, or finance terrorism. FinCEN 
was not persuaded by these arguments and is adopting the proposed 
amendment in keeping with its stated intention to update and clarify 
the categories of reportable cash out transactions.

V. Revision of FinCEN Form 103

    To assist casinos and card clubs in completing FinCEN Form 103, 
Currency Transaction Report by Casinos, FinCEN is providing the 
following guidance for items affected by this final rule. Slot jackpots 
are no longer required to be reported in item 31d (or elsewhere on the 
form). Money play bets are reported as cash in transactions in item 30d 
(``currency wager(s)''). Bills inserted into electronic gaming devices 
are reported as cash in transactions in item

[[Page 35013]]

30h (``other (specify)''), with the words ``bills inserted in EGDs'' in 
the space immediately following ``(specify)''. The redemptions of 
tickets are reported as cash out transactions in item 31a 
(``redemptions of casino chips, tokens and other gaming instruments''). 
Casinos may continue to use the current version of Form 103 if they 
complete it in accordance with this guidance. However, FinCEN is 
posting on its website a revised copy of Form 103 with minor editorial 
changes to reflect this guidance along with updated instructions to 
reflect the exemptions contained in Sec.  103.22(b)(2)(iii) in this 
final rule.

VI. Executive Order 12866

    The Department of the Treasury has determined that this rule is not 
a significant regulatory action under Executive Order 12866.

VII. Regulatory Flexibility Act

    We certify that this regulation will not have a significant 
economic impact on a substantial number of small entities, since the 
regulatory reporting threshold excludes casinos whose gross annual 
gaming revenues do not exceed $1 million. In addition, the final rule 
exempts previously reportable transactions, such as jackpots from slot 
machines and video lottery terminals, as well as cash out transactions 
involving certain money plays, from the final rule's reporting 
obligations.

VIII. Effective Date

    This rule is being made effective without a delayed effective date 
in accordance with 5 U.S.C. 553(d)(1).

List of Subjects in 31 CFR Part 103

    Administrative practice and procedure, Authority delegations 
(government agencies), Banks and banking, Currency, Gambling, Indian 
gaming, Investigations, Law enforcement, Reporting and recordkeeping 
requirements.

Authority and Issuance

0
For the reasons set forth in the preamble, part 103 of title 31 of the 
Code of Federal Regulations is hereby amended as follows:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND 
FINANCIAL TRANSACTIONS

0
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. 5311-5314, 
5316-5332; title III, secs. 311, 312, 313, 314, 319, 326, 352, Pub. 
L. 107-56, 115 Stat. 307.


0
2. Section 103.22 is amended by:
0
A. Revising paragraphs (b)(2)(i)(A), (E), (G), and (H), and adding a 
new paragraph (b)(2)(i)(I);
0
B. Revising paragraphs (b)(2)(ii)(A), (E), (F), (H), and (I), and 
adding a new paragraph (b)(2)(ii)(J); and
0
C. Adding a new paragraph (b)(2)(iii).
    The revisions and additions read as follows:


Sec.  103.22  Reports of transactions in currency.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (A) Purchases of chips, tokens, and other gaming instruments; * * *
    (E) Bets of currency, including money plays; * * *
    (G) Purchases of a casino's check;
    (H) Exchanges of currency for currency, including foreign currency; 
and
    (I) Bills inserted into electronic gaming devices.
    (ii) * * *
    (A) Redemptions of chips, tokens, tickets, and other gaming 
instruments; * * *
    (E) Payments on bets;
    (F) Payments by a casino to a customer based on receipt of funds 
through wire transfers; * * *
    (H) Exchanges of currency for currency, including foreign currency;
    (I) Travel and complimentary expenses and gaming incentives; and
    (J) Payment for tournament, contests, and other promotions.
    (iii) Other provisions of this part notwithstanding, casinos are 
exempted from the reporting obligations found in Sec. Sec.  
103.22(b)(2) and (c)(3) for the following transactions in currency or 
currency transactions:
    (A) Transactions between a casino and a currency dealer or 
exchanger, or between a casino and a check casher, as those terms are 
defined in Sec.  103.11(uu), so long as such transactions are conducted 
pursuant to a contractual or other arrangement with a casino covering 
the financial services in Sec. Sec.  103.22(b)(2)(i)(H), 
103.22(b)(2)(ii)(G), and 103.22(b)(2)(ii)(H);
    (B) Cash out transactions to the extent the currency is won in a 
money play and is the same currency the customer wagered in the money 
play, or cash in transactions to the extent the currency is the same 
currency the customer previously wagered in a money play on the same 
table game without leaving the table;
    (C) Bills inserted into electronic gaming devices in multiple 
transactions (unless a casino has knowledge pursuant to Sec.  
103.22(c)(3) in which case this exemption would not apply); and
    (D) Jackpots from slot machines or video lottery terminals.
* * * * *

    Dated: June 20, 2007.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
 [FR Doc. E7-12332 Filed 6-25-07; 8:45 am]
BILLING CODE 4810-02-P