Topic: Illinois Lottery
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Under Illinois law, agents that sell lottery tickets must segregate the sales proceeds in bank accounts separate from their other funds. We have some customers who initially deposit lottery proceeds into their general operating accounts before transferring the funds to their segregated lottery accounts. Is this permissible, or must the lottery proceeds be deposited directly into the segregated accounts?
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We believe that the proceeds from Illinois lottery ticket sales should be deposited directly into segregated accounts. The Illinois Lottery Law requires that all proceeds from ticket sales “shall be kept separate and apart from all other funds and assets and shall not be commingled with any other funds or assets.” Similarly, the Illinois administrative…
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What is our bank’s responsibility for ensuring that funds from lottery ticket sales are deposited in segregated accounts? Some of our customers sell lottery tickets without maintaining segregated accounts at our bank (but we do not know whether they maintain segregated accounts at other institutions).
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The Illinois Lottery Law does not impose requirements on banks to maintain segregated accounts for lottery funds; instead, it places the responsibility on the lottery sales agent. You may wish to remind customers that a failure to maintain segregated accounts for lottery proceeds is a Class 4 felony in Illinois, but you are not required…
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Our BSA consultants are telling us that customers selling lottery tickets must maintain separate lottery accounts. Is that true?
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Yes, customers that sell lottery tickets (such as gas stations and convenience stores) are required to segregate lottery proceeds from other business funds under Illinois administrative rules for the state’s lottery. In addition, your customers’ contracts with the Illinois Lottery likely require them to maintain segregated trust accounts. The Illinois Lottery Retailer Agreement states that a retailer…
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One of our customers is a gas station and convenience store. It has daily cash transactions of over $10,000, so we would like to designate it as exempt from the CTR filing requirements. We are not aware of any potential ineligible activities other than sales of lottery tickets. Are we required to collect the customer’s financial statements before making that designation?
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No. Depending on the customer’s activities, you may be required to collect additional information, but that would not necessarily include financial statements. As part of the exemption process, your institution must “take such steps to assure itself” that the customer is exempt and document “the basis for its conclusions.” For a business that is not…
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Is a lottery check from the Illinois State lottery a state government check for purposes of Regulation CC?
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We believe that a lottery check presented for deposit should be treated as a state government check for purposes of Regulation CC’s next-day availability requirement. Regulation CC requires that a check drawn by “a state or a unit of general local government” that is deposited in person to a bank employee and into an account…
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Do our customers need to maintain separate accounts for their lottery operations (for example, gas stations)?
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Yes. The Illinois lottery administrative rules specify the fund segregation and account requirements for lottery funds (11 Ill. Adm. Code 1770.60(t)): All Lottery proceeds are funds of the State of Illinois, must be segregated from other business or personal funds, must be held in trust on behalf of the Illinois Lottery, and the licensed sales…