Caesars Entertainment to pay $9.5m to atone for anti-money laundering lapses

TAGs: anti-money laundering, Caesars Entertainment, Caesars palace, fincen

caesars-palace-fincen-money-laundering-dealCasino operator Caesars Entertainment Corp (CEC) has agreed to pay $9.5m to resolve a federal money laundering investigation into high-roller activity at Caesars Palace in Las Vegas.

On Tuesday, the Financial Crimes Enforcement Network (FinCEN) announced that Desert Palace, which does business as Caesars Palace, had agreed to pay $8m to resolve an investigation into “severely deficient” anti-money laundering (AML) protocols at the Vegas casino. The Nevada Gaming Control Board piled on, announcing that it would impose an additional $1.5m penalty on Caesars for making the state look bad.

FinCEN claimed Caesars had willfully and repeatedly violated the Bank Secrecy Act by allowing high-rollers – many of whom were from Asia – to gamble anonymously in Caesars Palace’s private VIP gaming rooms. Caesars also “allowed a blind spot” to develop in its AML compliance by failing to monitor large wire transfers made by international marketing agencies (aka junket operators) on behalf of these high-rollers.

FinCEN director Jennifer Shasky Calvery said Caesars “knew its customers well enough to entice them to cross the world to gamble and to cater to their every need … Every business wants to impress its customers, but that cannot come at the risk of introducing illicit money into the US financial system.”

CEC issued a statement saying it had made “substantial improvements to every aspect” of its AML protocols in the nearly two years since it became aware that it had been placed under FinCEN’s microscope. CEC has also agreed to conduct periodic external audits and independent testing of its AML compliance program and engage in a “look-back” over its books for evidence of other dodgy transactions it may have failed to report.

Caesars Palace is controlled by Caesars Entertainment Operating Co (CEOC), the main unit of CEC that filed for Chapter 11 bankruptcy protection in January. As such, the Illinois court overseeing the bankruptcy must approve the FinCEN deal before the fine can be paid. It probably helps that the fine is less than half the $20m that CEC was rumored to be facing.

US financial watchdogs have been on the warpath against casinos’ lackluster approach to AML compliance over the past couple years. Atlantic City’s Trump Taj Mahal was fined $10m, Las Vegas Sands was dinged for $47.4m and the Tinian Dynasty casino in the Northern Marianas hit for $75m. Tinian Dynasty announced it would close this month after visitation tumbled following Typhoon Souledor, but it’s hard not to think that an extra $75m could have helped keep the lights on a while longer.


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