CASINO

Caesars close to a deal with feds over anti-money laundering lapses

TAGs: anti-money laundering, Caesars Entertainment, fincen

caesars-money-laundering-penaltyStruggling casino operator Caesars Entertainment is close to a deal with federal authorities regarding the company’s anti-money laundering (AML) lapses.

In October 2013, Caesars announced it was under investigation over potential money laundering activities at its Caesars Palace property in Las Vegas. This February, Caesars announced it had gone outside the company to hire a new AML compliance watchdog to help keep Caesars on the straight and narrow.

On Wednesday, Reuters reported that the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) was close to slapping Caesars with a civil penalty. The specifics haven’t been revealed, but it appears that no Caesars exec will be getting the boot, despite a source calling the AML lapses “very serious.”. A parallel investigation by the US Department of Justice will reportedly not result in further sanctions on Caesars.

Details on what sparked the AML investigation have never been spelled out but Reuters’ sources said the feds were alerted by Caesars’ failure to properly police sportsbook activity and to prevent illegal betting rings from placing wagers.

In a hugely ironic development, the fact that Caesars placed its main unit Caesars Entertainment Operating Co (CEOC) into Chapter 11 bankruptcy in January means the parent company could be off the hook for the bulk of the financial penalty. Under the provisions of the bankruptcy court, such penalties would be considered unsecured debt and thus the feds would have to get in the queue with Caesars’ unsecured creditors to see how many pennies are left in the piggy bank after the secured creditors tear off their pounds of flesh.

Federal agencies have put the US casino industry under a microscope over the past few years because casino operators allegedly weren’t living up to their obligations as “complex financial institutions.” In 2013, Las Vegas Sands paid a $47.4m fine to ward off more serious penalties stemming from the casino’s dealings with an alleged Mexican methamphetamine dealer. US casino operators with dealings in Asia have also found themselves under increased federal scrutiny.

This January, Atlantic City’s Trump Taj Mahal was hit with a $10m penalty for violating the federal Bank Secrecy Act, although, like Caesars, the feds expect to collect only pennies on the dollar from the bankrupt Trump Entertainment Resorts.

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