Deal On Its Way in Caesars Money-Laundering Probe

Posted on by Tim Hernandez

Deal On Its Way in Caesars Money-Laundering ProbeA deal may soon be agreed between Caesars Entertainment and federal investigators over allegations of non-compliance with money-laundering regulations.

The 1970 Bank Secrecy Act requires that financial institutions report certain currency transactions to the Financial Crimes Enforcement Network (FinCEN) – a department of the IRS – to assist federal agencies with the prevention of money-laundering by criminal organizations and international terrorists.

Under Chapter 31 of this law, casinos are required to report cash transactions with a value in excess of $10,000. Failure to comply with this anti money-laundering legislation can have significant consequences – as the Trump Taj Mahal Casino Resort in Atlantic City found out earlier this year when it was slapped with a $10 million civil fine.

Now it is the turn of Caesars Entertainment to feel the heat. An investigation dating back to 2013 is reaching its conclusion, and executives of the company are keeping their fingers crossed that the penalty imposed by FinCEN does not make a big hole in their bonuses or result in them being given jail time for “very serious” non-compliance with money-laundering regulations.

Caesars Palace in the Spotlight

The investigation came to light last year during an application by Caesars to build a casino at the Suffolk Downs racetrack in Boston, Massachusetts. During the unsuccessful application, it was revealed that FinCEN was investigating Desert Palace Inc. – the arm of Caesars Entertainment that runs the flagship Caesars palace Casino in Las Vegas.

At the same time, an investigation was being conducted by the Department of Justice into non-compliance with money-laundering regulations and – according to a report this weekend in – a federal grand jury investigation is still ongoing. Sources close to the Department of Justice investigation suggested that the Department will not take any punitive action beyond what is imposed by FinCEN.

Sources also revealed that the FinCEN investigation concerns the casino´s failure to “properly police sports book activity” and apply the recommended safeguards to prevent bets being placed by illegal sports-betting rings. Investigators may also be looking at compliance with Nevadan regulations passed this earlier year to eliminate intermediaries from betting transactions.

A Big Penalty and Improvements to Compliance Program

The likely outcome of a deal to resolve the Caesars money-laundering probe is that Caesars will get slapped with a substantial fine and casinos under Caesars control will have to improve their compliance programs. Jennifer Shasky Calvery – the Director of FinCEN – said casinos are not sharing information as they should across their business units and that they need to do more to prevent money laundering.

However, whether or not FinCEN ever gets to see the full amount of any fine is unsure. Caesars’ operating unit – Caesars Entertainment Operating Co – filed for Chapter 11 bankruptcy earlier this year and, as a fine would be considered to be an unsecured debt, FinCEN would be regarded as a secondary creditor with the possibility that the enforcement agency only sees 10c on the dollar.

One comment on “Deal On Its Way in Caesars Money-Laundering Probe”

  1. […] the language of the bill was never changed to confirm this. Furthermore, it was revealed today by that Caesars themselves are being investigated by FinCEN for violations of anti-money laundering […]

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