First-in-class tax and auditing application, built in just six months, enables casino industry to streamline workflow, reporting, and compliance with federal mandates
Mendix, a Siemens company and the global leader in low-code for the enterprise, today announced that CasinoSoft, a Nevada-based software development firm, has built a first-in-class, scalable compliance and taxation software package using the Mendix low-code platform. The package, ComplianceCore, digitizes and automates the extensive data collection and reporting required of casinos and card clubs operating under the U.S. Treasury Department’s anti-money laundering auditing rules, also known as Title 31 compliance.
Nearly 1,000 commercial and tribal casinos and card clubs in the United States comprise the $261 billion gaming industry. Those posting annual revenue of $1 million or more are subject to the same stringent oversight by the U.S. Treasury Department’s crime enforcement division, FinCEN, as are U.S. banks and other financial institutions. These federal regulations were put in place by Congress and strengthened after 9/11 to prevent criminal money laundering, terrorist financing, and other suspicious behaviors that would otherwise be obscured by the high volume of casino-based currency transactions. Fines for businesses not complying with FinCEN’s daily data collection and annual auditing requirements can add up to tens of millions of dollars.
“The majority of casinos are paper factories that generate massive piles of paperwork on a daily basis,” said Matt Montano, CasinoSoft’s CEO. “There is simply too much financial data coming from too many sources on the casino floor for employees to aggregate by hand and review. Regarding the casinos that do have enterprise financial systems, they’re often tied into backend legacy systems that are hard to update when technology improves or regulations change. Resource-stretched IT teams usually limit their upgrades of a casino’s workstations to once every two years.”
CasinoSoft built the three ComplianceCore modules in just six months, from scratch, using the Mendix low-code software development platform. Low-code is a visual development approach to application development that enables developers of varied experience levels to create applications for web and mobile, using drag-and-drop components and model-driven logic through a graphical user interface. CasinoSoft chose Mendix particularly for its open architecture and its collaboration and rapid development capabilities.
“Mendix’s underlying architecture enables our solution to integrate all the disparate sources of data generated by casino operations into a Mendix-built backend,” said Montano. “We can deploy quick functionality enhancements on the fly and do system upgrades five or six times a year.”
ComplianceCore dramatically reduces the amount of time casino staff spends on data collection and reporting for each gaming “day” (equal to a twenty-four-hour period).
“Data that formerly required days to crunch and organize is now completed in two to three hours. This gives the staff more time to focus on enhanced due diligence and other suspicious activity,” said Montano. CasinoSoft’s software package has been deployed in 12 casinos nationwide.
Three Modules Tackle Federal Reporting Requirements
The ComplianceCore software package consists of three standalone modules:
- ● Title 31 reporting package integrates disparate streams of financial transactions into a Mendix-built backend that is aggregated daily.
- ● Tablet Tax Forms digitizes and automates the IRS reporting requirements of any prize or jackpot above a $1,200 threshold.
- ● Document Automation automatically sorts and files scanned paper documents according to a player’s profile, account and federal filing status.
Zeroing in on Potentially Illegal Transactions
Casinos document every transaction above a minimum threshold, excluding food, beverages and merchandise. An individual’s aggregated daily spending of $10,000 or higher requires a Title 31 CTR filing. “Imagine trying to aggregate that from all the pit bosses and cage tellers into a single, cohesive property-wide log,” said Montano.
The ComplianceCore package also flags patterns that FinCEN classifies as suspicious activities. These include chip walking, which is when a player leaves without redeeming a large number of chips. Players who slowly redeem a large number of chips over a period of days are said to be structuring — perhaps to underreport IRS filings. Another red flag, called minimal play, is triggered when a customer buys a large number of chips with cash and places a few minor bets before cashing out a near majority of the chips. These behaviors may be an effort to disguise illegally received, traceable currency as a gambling win — in other words, money laundering.
Montano added “Casinos must intercede. They have no choice. Our platform gives casinos the tools and the horsepower to efficiently handle this regulatory burden.”
“We are glad CasinoSoft’s developers could leverage the Mendix platform to streamline and improve the industry’s data monitoring, aggregation and reporting,” said Johan den Haan, Mendix’s chief technology officer. “CasinoSoft’s ComplianceCore application package is a great example of how the truly open architecture at the core of our low-code platform enables developers to leverage core and legacy systems and data with brand new technologies that push the envelope of the possible. In today’s world, we know there’s no such thing as a free-standing, self-contained or isolated software application. A high degree of enterprise-grade interconnectivity is imperative to address ever-evolving needs within disparate technology landscapes.”