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In a further sign of escalating federal enforcement of anti-money laundering (AML) violations by U.S. casinos, Wynn Resorts has agreed to forfeit a record $130m to avoid charges related to illegal money transmissions to facilitate gambling by foreign players at its flagship resort in Las Vegas.
A few hours after Wynn acknowledged the settlement in a stock exchange filing, the U.S. Attorney's Office (USAO) of the Southern District of California confirmed that the company had agreed to pay more than $130.1m as part of a non-prosecution agreement (NPA) “to settle criminal allegations that it conspired with unlicensed money transmitting businesses worldwide to transfer funds for the financial benefit of the casino”.
Federal prosecutors also stated that the settlement “is believed to be the largest forfeiture by a casino based on admissions of criminal wrongdoing”, trumping an earlier forfeiture of more than $47m paid by rival Las Vegas Sands in 2013.
Although a copy of the NPA was not immediately available, the USAO said that Wynn’s alleged criminal violations related to its use of “third-party independent agents” to recruit high-rolling foreign players to gamble at the Wynn Las Vegas casino.
To ensure funds were available to these players, Wynn’s contracted agents would transfer money to a Wynn Las Vegas bank account in California via a series of companies and third parties based in Latin America and elsewhere, prosecutors said.
“The convoluted transactions enabled foreign gamblers at [Wynn Las Vegas] to evade foreign and U.S. laws governing monetary transfer and reporting,” the USAO stated, citing the example of one Juan Carlos Palermo, who conducted more than 200 such transfers amounting to more than $17.7m on behalf of Wynn customers.
Palermo, from Buenos Aires, pleaded guilty to federal money laundering charges in 2022 in connection with unlicensed money transmissions he conducted from Uruguay to multiple casino operators in the United States, on behalf of players from various countries including Hong Kong, Mexico, Switzerland and the United Arab Emirates.
Federal prosecutors also said Wynn violated federal law and regulations by allowing so-called “Human Head” gambling, whereby one player would purchase chips and gamble as a proxy for another nearby patron, who wished to remain unidentified.
The USAO alleged that Wynn “knowingly allowed this form of gambling without scrutinizing the true patron’s funds and without reporting the suspicious activity”.
Prosecutors further alleged that Wynn knowingly allowed so-called “Flying Money” schemes, in which third parties would collect and deliver cash to a Wynn Las Vegas casino patron, who would then make an equivalent transaction outside the United States to that third party using foreign currency from a foreign bank account.
In addition, the USAO’s statement accused Wynn Resorts of failing to file suspicious activity reports (SARs) as required under federal AML regulations under the Bank Secrecy Act.
This included an incident in 2018 when Wynn facilitated more than $1.4m in transactions for an individual who just a year earlier had been denied entry to the U.S. because of suspected ties to a criminal organization while in the company of the marketing president of one of Wynn’s international affiliates.
Friday’s NPA appears to mark the culmination of a years-long investigation by the USAO based in San Diego.
Wynn Resorts first acknowledged the probe via U.S. Securities and Exchange Commission (SEC) filings in 2020, when it said it had received requests for information followed by subpoenas from two federal grand juries.
In its SEC filing on Friday (September 6), the company said the NPA resolves all investigations into alleged AML violations that had been ongoing since 2014. Prosecutors have duly acknowledged Wynn’s cooperation and its “extensive remedial measures” regarding AML compliance, the company said, as well as the fact that Wynn Las Vegas no longer does business with any of the third parties implicated in the investigation.
In addition to Palermo, the USAO in Southern California last year announced deferred prosecution agreements with two Mexican nationals and one Mexican company who similarly admitted to conducting unlicensed money transmissions for foreign patrons of U.S. casinos. At least five other men have been successfully prosecuted since 2020 for transferring money to Las Vegas casinos on behalf of players from China.
The office on Friday said its investigation had so far resulted in 15 individual defendants admitting money laundering and other criminal violations, resulting in criminal penalties of more than $7.5m.
“Casinos, like all businesses, will be held to account when they allow customers to evade U.S. laws for the sake of profit,” said U.S. Attorney Tara McGrath, the chief federal prosecutor in San Diego, in a statement. “Federal oversight seeks to prevent illegal funds from tainting legitimate businesses, ensuring that casinos offer a clean, thriving, and safe entertainment option.”
Friday’s settlement with Wynn follows unrelated NPAs inked earlier this year by the USAO in the Central District of California with the MGM Grand and Cosmopolitan resorts in Las Vegas.
Those agreements, which included forfeitures totaling $7.45m, were related to failings by the casinos to appropriately report suspicious gambling activities by illegal bookmakers who have subsequently been subject to federal prosecution. One former casino executive, Scott Sibella, was also criminally charged.
Genting’s Resorts World Las Vegas, formerly managed by Sibella, faces a related enforcement action announced last month by the Nevada Gaming Control Board.
