Gambling enterprises, both legal and illegal, have long been considered to be integrally involved with criminal elements in various ways. In recent decades, concerns have revolved around the use of casino organizations as bank¬ing institutions that could aid criminals in what is called money laundering. The Bank Secrecy Act of 1970, with amend¬ments; the Money Laundering Act of 1986; and the Money Laundering Suppression Act of 1994 address the problem of money laundering.
Money laundering involves various activities. One example of money laundering is simply exchanging one set of cash bills for another set of cash bills. Many criminal enterprises rely upon patronage of ordinary people at the street level—purchasers of drugs, illegal bet¬tors, or customers of prostitutes. Such people pay for products and services with small denomination bills—ones, fives, tens, and twenties. As a result, criminal enterprises have very large quantities of paper money. It is difficult to carry the money, and it is especially hard to transport the money outside of the coun¬try in order to put it into secret bank accounts in other countries. When a bank or a casino willingly changes many small bills for a few large bills, they may be laundering money for criminal elements.
Laundering also occurs when finan¬cial institutions convert cash deposits into different forms—traveler’s checks, cashier’s checks, or money orders. The institutions may also assist inadvertently by initiating a series of wire transfers of money to foreign bank accounts or to other people’s accounts in a series of transactions that make it difficult for law enforcement to identify the true source of the money.
Casinos are also vulnerable for use by criminals who simply wish to establish a legitimate source for their funds so that they may use them openly. Theoretically, it would be very easy for a criminal to come to a casino, change cash into casino chips, wager with a confederate at roulette (one playing black, the other red), and then claim all the chips they end up with as income—keeping a record only of their wins and not of their losses. If a casino would cooperate in such a ruse, the gamblers may be very happy to let the casino have its 5 percent edge in the game (both players would of course lose when the roulette ball fell into the zero or double zero slot of the wheel).
In the case above, the gamblers are content to pay income tax on their winnings, freeing them from the fear of being subject to investigation from the Internal Revenue Service. The situation is even better in Canadian and European casinos, where no income tax is imposed upon winnings. All the gambler needs is a verification that the money was won at the casino. That casinos might partici¬pate in laundering money was suggested in an interview with the manager of a large European casino. When asked, he quietly said, “[I suppose] that is a service we provide.” He would be pleased to have the player’s action, because the casino could not lose. Today, however, casinos in the United States can lose by laundering criminal money: they can be fined or closed down if they are caught playing such games.
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