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Recently there has been an unprecedented number of anti-money laundering (AML) actions targeting casinos and cardrooms by federal law enforcement and state gaming regulators, with significant fines and non-prosecution agreements suggesting increased industry scrutiny.
Among the agencies mandated to monitor the gaming industry for compliance with the federal Bank Secrecy Act (BSA) are the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), the Internal Revenue Service (IRS) and the U.S. Department of Justice (DOJ).
In recent months, the DOJ has been active in terms of settling potential criminal cases for illegal gambling and negligence in AML programs, with U.S. attorneys announcing non-prosecution agreements in recent months with both Wynn Resorts and two Las Vegas casinos owned by MGM Resorts International.
Sean Topchi, director of business development with Kinectify, said non-prosecution agreements with casinos have been “largely in play this year”.
“I think that will continue to play in the coming years,” Topchi said.
In additional to federal law enforcement, Topchi said, “we have state gaming agencies, which we typically haven't seen as involved in AML enforcement and regulation”.
Topchi noted that in 2024 there has already been four federal enforcement actions involving casinos.
The last time there were four FinCEN enforcement actions was in 2015, with the former Trump Taj Mahal Casino Resort agreeing to a $10m fine for violations of the BSA before the Tinian Dynasty Hotel Casino was fined $75m, Caesars Palace in Las Vegas paid $8m for BSA violations, and a $650,000 fine was imposed on the Oaks Card Club in California.
Topchi noted that this year began with two MGM casinos in Las Vegas paying a combined $7.45m to resolve alleged violations of AML laws connected to the guilty pleas by former gaming executive Scott Sibella.
The fines paid by MGM Grand and The Cosmopolitan of Las Vegas were part of NPAs that will allow the two casino-resorts to avoid charges for violations of the BSA, according to the Justice Department.
As part of their NPAs, both properties have also agreed to undergo external reviews and enhance their AML compliance programs.
U.S. Attorney Jeff Mitchell, who handled the AML cases involving the MGM properties, Sibella and illegal bookmaker Wayne Nix, has spoken about the case at several events such as the BSA-AML Compliance Group conference in August at Caesars Palace in Las Vegas. Mitchell stressed that for casinos it is not just about AML compliance but their actual attempts to detect, deter and report incidents.
“One thing he very clearly said in multiple sessions was being in compliance with the BSA doesn’t necessarily protect you from money laundering prosecution,” Topchi said. “I thought that was a very impactful statement. So just passing an IRS exam doesn’t mean anything if people are still successfully able to launder proceeds of crime through the casino itself.”
Lauren Melcher of Vector Solutions noted that federal attorneys prosecuting the cases asked what Nix’s total cash wagered was, instead of looking at win and loss.
“They’re just saying what’s the cash in. Slap a two times [penalty] on that,” Melcher said. “So that can become very, very burdensome, if you’re talking about some of the high-rollers that can play at casinos.”
Mitchell also emphasized that those cases involved individuals identified as illegal bookmakers who brought in large volumes of cash in duffel and paper bags.
“There’s so many products and services that casinos and banks offer that there’s not as much need to be walking around [with] $50,000 in cash through a casino garage, which is probably something normal people don’t want to do,” Topchi said. “We have credit services … digital wallets for cashless gaming being introduced.”
“There’s so many mechanisms in place to make it convenient and safe for customers to have large volumes of currency in the casino without having to … physically carry around loads of cash,” he added.
Melcher said Mitchell reminded compliance executives that if they are not comfortable with a casino customer they cannot stop investigating that customer if they want to retain them. Know your customer (KYC) investigations should include back account information, bank statements, tax returns, and activity at other properties if that information is available.
“So, pull everything under the sun to get comfortable,” Melcher said. “If you can’t get comfortable … then there has to start being a conversation about the relationship with the patron.”
Topchi highlighted several other actions including Sibella being sentenced in May to one year’s probation and fined $9,500 for violating the BSA. He pleaded guilty to a single charge of failing to file a suspicious activity report (SAR) at MGM Grand in 2017.
Resorts World Las Vegas is facing potentially significant fines for allegedly violating AML laws.
The Nevada Gaming Control Board (NGCB) filed a 12-count disciplinary complaint against the ownership and operators of Resorts World Las Vegas for allowing known illegal bookmakers to gamble millions of dollars at the resort for more than a year. Much of the activity occurred while Sibella was president of the resort prior to being fired in September 2023.
The complaint surrounds the activities of illegal bookmaker Matthew Bowyer, who pleaded guilty in August to operating an illegal gambling business, money laundering and filing a false tax return.
“I think it’ll be interesting to see how this plays out, where they land with these penalties and fines,” Melcher said. “We may see more coming from other regulatory bodies.”
In another sign of escalating federal enforcement of AML violations by U.S. casinos, Wynn Resorts has agreed to forfeit a record $130.1m to avoid charges related to illegal money transmissions to facilitate gambling by foreign players at its Wynn Las Vegas casino. Federal prosecutors believe the forfeiture is the largest by a casino, topping the $47m paid by Las Vegas Sands in 2013.
That was followed last week when Lake Elsinore Casino in southern California agreed to a $900,000 fine with FinCEN for BSA violations, including failing to implement and maintain an effective AML program, and failing to file currency transaction reports (CTRs) and suspicious activity reports (SARs).
Topchi said Lake Elsinore’s $900,000 fine might not be as eye-popping as $7.5m for MGM or Wynn forfeiting $130.1m, but it is still very significant for a small cardroom with 22 tables.
“That’s not a whole lot in terms of possible volume that you could get through there,” he said. “So, the $900,000 may honestly be more significant to them than $130m [to Wynn], and certainly more significant than $7.5m to MGM and Cosmopolitan.”
Topchi and Melcher participated in a webinar on Tuesday (October 29) titled “AML in 2024: A Renewed Government Focus on Gaming,” hosted by Christine Faria, executive editor with Tribal Gaming and Hospitality magazine.
