Anti-money laundering (AML) compliance professionals understand that solid suspicious activity reporting and documentation processes are crucial to satisfying regulatory and examiner expectations.  Via policies, procedures, and never-ending education, we seek to protect operators from fines, penalties, or other enforcement actions. Like many compliance matters, though, the process doesn’t happen in a vacuum or a nice, neat box. Instead, it involves engagement and collaboration with the operating departments and obtaining buy-in from all levels of staff.  

Front-line employees are the eyes and ears of any gaming establishment and play a critical role in detecting and reporting observed suspicious activity. They are often the first line of defense in identifying potential criminal behavior and preventing money laundering or other illicit activities. Their vigilance and quick reporting can help to mitigate the risks associated with criminal activities. Therefore, to ensure the overall effectiveness of an operator’s AML program, it is imperative these team members understand and feel empowered in their suspicious activity reporting responsibilities.  

So, what does it take to feel confident that compliance is receiving notifications of true suspicious activity, as appropriate? The most effective programs are multi-faceted and work closely with operating departments. They also incorporate processes that are transparent, well communicated, relatively easy, and well supported.

Here are some effective ways to partner with operations to foster a more collaborative and robust AML process within your organization:

‍Understand the Operational Perspective

A balanced give and take relationship between operations and compliance can go a long way. By working closely with operational employees, compliance can seek to understand their day-to-day experiences and any challenges they may face in fulfilling AML compliance responsibilities. Compliance professionals should have a comprehensive understanding of the full scope of the front-line employee experience and a clear grasp of the flow of communications and data within platforms. Get into the weeds of front-of-house processes, shadow front-line staff, conduct employee interviews to learn how suspicious activity is typically observed and reported.  

Taking the time to understand the tools and resources available to front-line employees can also assist in identifying any obstacles or frustrations they encounter. Roadblocks may deter or prevent staff from detecting and reporting suspicious activity. An in-depth knowledge of the operational experience allows for an opportunity to assess and ensure they have the necessities to report suspicious incidents and an unfettered path to report quickly and efficiently.

‍Ongoing Training and Tailored Materials

Ongoing AML training is, of course, a requirement, but it should be about more than just checking a box. Training employees to recognize and report suspicious activity is critical to the effectiveness of an establishment’s anti-money laundering program. Employees must understand the types of behavior that could be indicative of money laundering or other criminal behaviors, the activities they are likely to encounter, how to identify them, report them, and the consequences of failing to report.  

Many operators opt to pay for a pre-packaged Bank Secrecy Act (BSA) or AML course, and certainly there is merit to this approach. Pre-packaged courses are often convenient and easily trackable for compliance, but there is also a breakdown in how this information gets interpreted by a front-line employee. An overview of the applicable regulations is great but often AML/BSA training materials don’t address the day-to-day job duties, systems, or specific staff expectations based on internal policies and procedures.  Instead, consider using a pre-packaged annual course merely as a jumping off point for your materials and something to build upon within your training program. A multi-layered training approach with customized materials and increased employee touchpoints can address exactly what an employee should expect to encounter. Providing reference materials for internal use can assist with those few and far between moments when an employee might forget their annual training. Build on your understanding of the operational perspective by offering additional quick reference guides, system screen shots, step-by-step how-to’s, frequent mini refreshers, etc. These additional tools along with a healthy frequency of use, can help to keep AML responsibilities stay on the forefront of operational minds.  

Give employees clear and practical examples of the types of suspicious activity they are likely to encounter at your institution. Some types of activities can occur just about anywhere, such as forged IDs or payment fraud, but others will be specific to your gaming establishment. For example, in sports betting, suspicious activity may include unusual or large bets that are not consistent with a player's typical betting behavior. In online gaming, suspicious activity may include unusually large deposits, withdrawals, transactions, or players who engage in unusual patterns of play. For land-based casinos, suspicious activity may include table players who buy-in for large amounts of cash, play only a few hands, and then cash out quickly, or slot players who feed large volumes of small denomination bills into a machine, and then cash out quickly. These examples are certainly not all-encompassing, but sharing examples of incident types specific to your operation can aid staff in knowing what behaviors to watch for and which to report.

Try shedding some light on the mystery of AML compliance. Give operations staff the process overview, share the Suspicious Activity Report (SAR) lifecycle, and tell them the types of law enforcement agencies that use reported data. Help front-line employees  appreciate their role in the SAR cycle and its importance. In fact, they are the most valuable part of the suspicious incident reporting process as the first line of defense and detection. Catching bad actors and involvement in financial crimes investigations can be kind of cool, right? Beyond trying to sell the cool factor, guide them to understand the gravity of the program for their employer, the industry, and the financial system as a whole. All staff should remain aware of the implications of non-compliance, not just for the operator but for themselves as individuals. Fines and jail time can be real consequences for anyone afraid they may not look good in orange jumpsuits.

‍Clear Reporting Mechanisms and Expectations

Operators can also consider implementing mechanisms to encourage employee engagement and reporting. Incident reporting should be as frictionless and as easy as possible for staff.  Modern AML software can support this by giving all staff easy access to incident reports that are directed to compliance users as high-priority items.  

Other options also include anonymous hotlines or online reporting systems that employees can use to report suspicious incidents. This can help overcome any fears of retaliation that employees may have and encourage reporting of suspicious activity. Operators looking for low-tech solutions can create a custom form and drop box for front-line reporting of suspicious incidents. (Pro tip: Do NOT call the form a “SAR”, it is only an incident report until investigated further). Forms should be accompanied by procedures which clearly detail the expectations of what, how, and when to report incidents. Clear and effective procedures should also address the following considerations:

• BSA definitions of required activity types to be reported.
• Established dollar threshold for incidents to be reported.  
• Should operations report incidents of any dollar amount for further investigation?
• Only report incidents involving $5,000 or more?
• Turn-around time from incident occurrence to report completion and delivery.
• Involvement and/or notification of Surveillance.
• Compliance contact information for any questions.  

Accountability Balanced with Support

Gaming operators can empower their employees to own their compliance responsibilities by clearly defining and communicating duties and the consequences for non-compliance. This can be done through regular training and education sessions, as well as by incorporating AML compliance into employee job descriptions and performance evaluations. Establishing a corrective process for as a consequence for failing to report suspicious activity or meet other requirements of their role, can be a very effective deterrent to non-compliance. Having a useful employee performance escalation process not only encourages employees to take their responsibilities seriously, but also offers a clear path forward for any employee displaying patterns of non-compliance or willful disregard of policies and procedures.  

Holding staff accountable to compliance requirements is critical, however, accountability should always be balanced with sufficient support. Support begins with an understanding of the operational perspective and identifying any obstacles to successful reporting. Not only might there be physical or system limitations, but it is also important to recognize that front-line employees may be hesitant to report suspicious activity for fear of retaliation or negative consequences. To address this concern, training materials could emphasize confidentiality and the “safe harbor” provision from the BSA, which provides immunity from civil liability for the reporting of known or suspected criminal offenses or suspicious activity. Gaming operators may also want to consider establishing anonymous reporting channels that allow employees to report incidents without fear of reprisal.

Operational Leadership Engagement

Whenever compliance professionals seek to engage other departments or staff, whether it be for suspicious activity purposes or other compliance concerns, we are really seeking to foster a culture of compliance within the organization. This involves a commitment from staff to adhering to all relevant laws, regulations, and industry standards. But all staff buy-in can’t be accomplished without an equally committed tone from the top. When senior leaders and management prioritize AML compliance and frequently communicate its importance to all employees, it creates a culture that values ethical behavior, responsible business practices, and regulatory compliance. This tone can have a significant impact on an organization's suspicious activity procedures, too.  

Leadership teams that both show and communicate that AML is a priority are more likely to create a culture that encourages employees to report any suspicious incidents they observe. Behaviors that lead by example set the tone for the entire organization and motivate front-line employees to fulfill their AML compliance obligations. Employees may feel more comfortable reporting suspicious behavior they observe, knowing that their concerns will be taken seriously, investigated thoroughly, and they have the full support of management. On the other hand, if leadership does not prioritize ethics and compliance, employees may be less likely to report suspicious activity. They may be less likely to take their AML responsibilities seriously or may not report observed incidents out of fear of retaliation or a belief that nothing will be done to address their concerns.

Obtaining that commitment from leadership can sometimes be easier said than done, but again, building synergy with operations starts with understanding their perspective. Ask department leads and operational management for feedback on compliance procedures. When leadership is engaged in the improvement process and understand the end goal, they are far more likely to take ownership and commitment towards compliance matters. Commitment from leadership translates in increased and ongoing dialogue with front-line employees to address concerns or challenges related to AML compliance or incident reporting procedures. Engagement and concern can also be leveraged for periodic reminders to staff of their responsibilities. Encourage and prepare AML talking points in department or team huddles to ensure employees are staying mindful of policies and procedures. When leaders prioritize these values, it can help encourage employees to report suspicious activity, ensure that standards and regulations are properly followed, and ultimately help prevent fraudulent or criminal activity within the organization.

In conclusion, operations play a crucial role in detecting and reporting observed suspicious activity in gaming establishments. Having a robust AML Program and suspicious incident reporting means engaging front-line employees on multiple levels. A comprehensive approach includes understanding the operational perspective, offering ongoing training accompanied by tailored materials, providing clear reporting mechanisms and expectations, holding employees accountable while offering adequate support, and cultivating operational leadership engagement. With the increasing scrutiny and regulations, operators must take proactive measures to identify and report suspicious activities.  

However, it is equally important to support employees in their roles, foster a culture of compliance, and ensure that everyone in the organization understands their role in detecting and reporting suspicious activity. Developing a strong partnership with operations can help mitigate the risks associated with money laundering and other illicit activities, protect the integrity of the gaming industry, and help compliance professionals sleep a little better at night knowing they are effectively receiving suspicious activity notifications.

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ABOUT THE AUTHOR

Melanie Repko is an accomplished AML Compliance leader with a wealth of experience in the gaming industry and other high-risk sectors including banking and cannabis. Melanie has served in compliance management positions for large gaming operators such as Penn National Gaming, Caesars Entertainment, and Golden Entertainment, where she helped to build out robust AML Programs and implemented mitigating controls. She also served as the BSA/Compliance Officer for Hollywood Casino Toledo and most recently for O Bee Credit Union.

Melanie’s skills include risk assessments, writing policies and procedures, process refinement, AML Program scalability, training, and financial crimes investigations. She also has a proven track record of achieving clean audits from regulators and examiners.

Prior to beginning a career in compliance, Melanie attended Franklin University, where she graduated with honors and obtained a BS in Healthcare Management. Melanie is also certified as a Bank Secrecy Act Specialist (BSACS).

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ABOUT KINECTIFY

Kinectify is an AML risk management technology company serving gaming operators both in the US and Canada. Our modern AML platform seamlessly integrates all of the organization's data into a single view and workflow empowering gaming companies to efficiently manage risk across their enterprise. In addition, Kinectify's advisory services enhance gaming operators' capacity with industry experts who can design and test programs, meet compliance deadlines, and even provide outsource services for the day-to-day administration of compliance programs.

To learn more about Kinectify and book a demo, click here.