A gaming lawyer and former UNLV professor who authored a book on casino ethics said it may be time for federal law enforcement and state regulators to pursue criminal cases to halt anti-money-laundering violations.
Anthony Cabot, the author of a book soon to be published by Huntington Press titled Casino Redux: Unveiling the Global Network of Chinese Organized Crime, said pressure on executives to produce revenue has prompted casinos around the world to turn a blind eye to criminal activity and that levying fines against casino operators isn’t enough deterrence.
Cabot’s comments come as Wynn Resorts has taken responsibility for actions that led to a $130 million federal punishment over unregistered international money transmissions. In addition, it will accept a $5.5 million fine the Nevada Gaming Commission will vote on Thursday.
The settlement announced last week with the Nevada Gaming Control Board is related to the federal investigation Wynn Las Vegas resolved with the U.S. Attorney’s Office in September.
“Wynn Resorts is committed to acting with the highest integrity and in full compliance with all laws and regulations governing our industry,” Wynn spokesman Michael Weaver said in a statement. “The improper actions that are the subject of the settlement, which violated Wynn’s own compliance policies and procedures, were undertaken by individuals with whom we severed ties years ago. We accept responsibility for those actions and are now glad the matter will soon be fully resolved.”
Wynn forfeited $130 million to the federal government to settle criminal allegations as part of a non-prosecution agreement with the U.S. Department of Justice to resolve the 10-year-old investigation over unlicensed money-transfers from around the world funneling funds to gamblers at Wynn Las Vegas.
The Nevada Gaming Control Board complaint details instances where former Wynn employees allowed international patrons to obtain and transfer money improperly for wagering and allowed wagers to be placed for other patrons at Wynn Las Vegas in violation of the gaming licensee’s anti-money-laundering compliance program.
In addition to the $5.5 million fine, the agreement places conditions on the gaming license of Wynn Resorts. The proposed settlement also details numerous remedial measures to Wynn’s anti-money-laundering program, as well as additional training and employee awareness of AML requirements.
It’s the third financial settlement with Las Vegas casinos made in the past two months.
In March, Resorts World Las Vegas accepted a $10.5 million fine from the Commission on allegations it catered to illegal bookmakers involving millions of dollars. In April, MGM Resorts International apologized for accepting nearly $5 million in wagers from illegal bookmakers and accepted a $8.5 million fine from the Commission.
“There’s a fundamental flaw in the system,” Cabot said of the ongoing problem with Las Vegas casinos and AML violations. “They need to focus more on punishing the culpable parties. It’s fine to punish the casinos themselves. The people who have fallen to temptation and aided and abetted these types of misdeeds are long gone. The casino has new management and a new commitment to regulatory compliance and AML.”
Cabot said the solution is to make sure the law is clear on state and federal levels and that managers who have been involved can be punished after they leave not only the company, but the industry.
“That would be a far more effective deterrent than to fine the casino post-facto,” Cabot said.
Cabot said his book focuses on AML transgressions all over the world, but no one went to jail for it. “That to me is an unacceptable state of affairs. You have to make the act of aiding and abetting these types of anti-money- laundering activities a substantial crime and the possibility of going to prison. That hasn’t occurred and it’s the biggest flaw in the system.”’
Cabot said he doesn’t reason why that hasn’t happened. He suggests that states need to amend laws to give the regulators continued jurisdiction to prosecute the executives involved even after they leave the industry.
In December, Sibella, the former president and COO of Resorts World Las Vegas and former executive at the MGM Grand had his gaming license stripped after pleading guilty to federal charges for failing to report illegal gamblers playing at MGM Grand in 2018. He was accused of not knowing the source of a customer’s funds and failing to file a suspicious activity report after allowing illegal bookmaker Wayne Nix to gamble. The case didn’t involve jail time.
The anti-money-laundering violations have involved properties that deal with high rollers. Lower-tier casinos don’t have enough money going through the tables to be attractive to those trying to launder money, Cabot said.
“The last three casinos had substantial high-roller clientele. It’s likely that we’ve seen the last of it, but you really don’t know,” Cabot said. “AML is primarily the responsibility of FinCEN (Financial Crimes Enforcement Network of the U.S. Department of Treasury) and FinCEN typically doesn’t publicize that they’re investigating, so you don’t know what might be going on. My guess is we’ve probably seen the last of this wave of these types of AML issues.”
Cabot said that doesn’t mean it won’t happen again. The hardest thing for the industry to understand is history. While current management may not have been involved in any of the issues that have arisen, they know the consequences of the casinos that have been involved, he noted.
“As time goes on and there’s pressure on upper management to hit certain revenue targets, future executives forget the lessons of history and repeat themselves,” Cabot said. “This is really a strong message to the industry and I think it’s currently listening. That doesn’t mean five to 10 years down the road or another casino that hasn’t been involved in these types of schemes won’t find the temptation in dealing with these high rollers irresistible to what it means for the bottom line.”
Cabot said the way these money-laundering operations work is that the customer has to gamble a specific amount to take advantage of the casino. The house advantage means the casino will make a profit through a player’s attempt to launder money.
“The high rollers with a large amount of money are a substantial contribution to the bottom line of the casino,” Cabot said. “In most cases, they play baccarat. If you look at the revenue numbers in Nevada, when the baccarat numbers go up, the idea of falling to the temptation of allowing a casino to be used to launder money just intensifies.”
With federal cutbacks, anti-corruption groups are concerned that anti money laundering won’t be a priority and cases like those against Wynn, MGM, and Resorts World won’t be uncovered.
“It’s hard to say. I haven’t seen whether there have been cuts to FinCEN,” Cabot said. “FinCEN is typically first to spot the issue and their investigations lead to the Department of Justice prosecutions. If there have been cutbacks to FinCEN, in particular the casino division, it becomes a substantial issue. It should force state regulators to take a much stronger interest in the area, because they won’t have the advantage of having FinCEN take the lead.”
Cabot said some state regulators, such as those in Nevada and New Jersey, are best positioned with their audit presence to police the area, but others are “completely incapable” of doing that. The good news is it can happen only in states and casinos with enough volume to be attractive to those trying to launder money.
