Amid Criminal Investigation, U.S. Casinos Urged To Tighten Source Of Funds Procedures

May 1, 2024
The federal prosecutor who brought charges against a one-time Las Vegas casino executive and the former interpreter for Shohei Ohtani of the Los Angeles Dodgers has urged casino compliance executives to consider more options to assist them in verifying the source of patrons’ funds.

The federal prosecutor who brought charges against a one-time Las Vegas casino executive and the former interpreter for Shohei Ohtani of the Los Angeles Dodgers has urged casino compliance executives to consider more options to assist them in verifying the source of patrons’ funds.

U.S. attorney Joseph McNally, the chief federal prosecutor for the District of Central California, recently joined a working group of compliance officials for California tribal casinos to outline specific items that both commercial and tribal casinos should consider when conducting due diligence on their patrons, according to Paul Camacho, vice president of compliance for the San Manuel Band of Mission Indians' Yaamava’ Resort and Casino in Highland, some 70 miles east of downtown Los Angeles.

Camacho said McNally outlined how casinos are required to use all available information to assess anti-money laundering (AML) risks, which McNally said should include “what’s in the head of your employees, specifically hosts.”

McNally reminded the group of executives that casino hosts talk to a lot of patrons and have information that can be useful in determining their source of funds. He also suggested that casinos use a source of funds questionnaire.

The federal prosecutor did not tell casino officials that they had to do so, “but he said you should consider if you have these types of questionnaires when they don’t provide adequate information,” Camacho said Tuesday (April 30) during an online seminar analyzing the U.S. Treasury Department's 2024 National Money Laundering Risk Assessment report.

Camacho said McNally asked the group of executives if a patron refuses to provide information, whether they file a suspicious activity report (SAR) or ban them from the casino. 

“These are things he mentioned out of his mouth that he said you should consider,” Camacho said. “Now, those might be things to casinos that are just validating your program, but I think there were some people who heard this as we are not doing these things.”

McNally's office has recently become a center of attention for the U.S. gaming industry in light of successful charges brought against former Las Vegas casino executive Scott Sibella and non-prosecution agreements inked by two MGM Resorts properties over anti-money laundering failings related to illegal bookmaking operations.

ESPN reported on Tuesday that prosecutors are more broadly investigating illegal sports-betting operations in Southern California that have sought to launder their proceeds via Las Vegas casinos. Resorts World Las Vegas, where Sibella was later a senior executive, has received a subpoena from federal prosecutors and is cooperating with the investigation, ESPN reported.

The takeaway from the Sibella case, Camacho said, is “that case started with the bad guy.”

“It didn’t start with an investigation of a casino,” Camacho said. “[The U.S. Department of Justice] has laid out their roadmap that, 'If we investigate a bad guy and we see them go into a casino, we have now made a model of what to do. We are going to look to see if you put profits over compliance. We are going to build that case as a criminal case'.”

Sean Topchi, director of business development with Kinectify and moderator of Tuesday’s  discussion, said he also attended the meeting with McNally. Greg Lisa, chief legal officer at DELV, and Alex Costello, vice president of government relations with the American Gaming Association, also participated in the webinar.

Topchi said McNally reminded compliance executives that passing a Bank Secrecy Act anti-money laundering examination conducted by the Internal Revenue Service does not protect a casino from potential criminal prosecution under Section 1957 of the U.S. Code.

Sibella is scheduled to be sentenced on May 8 in Los Angeles after being convicted on one count of failure to file reports of suspicious transactions required to be made by casinos.

Sibella was president of MGM Grand from about August 2017 until February 2019, during which time he knew that one prominent casino patron, Wayne Nix, ran and operated an illegal bookmaking business.

Despite being required to report the activity, Sibella failed to report to MGM’s compliance department that Nix was an underground bookie.

The MGM Grand and The Cosmopolitan of Las Vegas earlier this year agreed to pay a combined $7.45m for the actions of its former employees and the failures of their AML compliance programs. 

IRS Criminal Investigation and Homeland Security Investigations agents, as part of the so-called El Camino Real Task Force Investigations, also exposed a $16m theft from Ohtani, the baseball superstar, by his interpreter.

His former translator, Ippei Mizuhara, has been charged with using the money stolen from Ohtani to pay gambling debts owed to illegal bookmaker Matt Bowyer.

Bowyer was reportedly well-known at Resorts World Las Vegas. He is cooperating with the federal investigation.

With both Nix and Bowyer having been prominent customers at licensed Las Vegas casinos, the Nevada Independent reported that the Nevada Gaming Control Board has joined the investigation.

Camacho said Tuesday that McNally’s address laid out some tools that compliance executives and staff should consider that they may have not considered before.

“But now we are in a new environment where DOJ basically said, we are going to take this approach, and that to me is even more concerning than the IRS coming out and saying we might fine you,” Camacho said.

“Just being a target of a criminal investigation is really bad.”

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