An international bestselling author warns that casinos are vulnerable to money laundering, but not the old-fashioned way of criminals bringing in duffle bags filled with $100 bills. Rather, the risk is from suppliers who do business with the properties.
Jeffrey Robinson, the author of more than 30 books, including The Laundrymen, told casino security, surveillance, and other executives at the World Game Protection Conference in Las Vegas to be on the outlook for cartels and other criminal organizations that try to launder money via the back door through vendors.
Robinson raised the issue after highlighting a case in the U.S. in which the Bicycle Hotel & Casino in November paid $500,000 to settle anti-money laundering violations. The complaint alleged the casino didn’t file reports on a Chinese player who did more than $100 million in transactions over 10 months in 2016.
“When you saw the story,” Robinson told conference attendees, “I’m sure you all said this is a problem and we have to make sure our security is up to it. We have to look at our systems again to make sure it can’t happen to us.”
Because casinos are aware of any attempts to bring large amounts of cash onto a property, Robinson said the best way for criminals to launder money in the future is where they will be least observed.
“I saw the story and had a very different reaction,” Robinson said. “My reaction was, who has $100 million in cash? Only one group I can think of that has $100 million in cash in the United States are Mexican cartels with drug money all across the country.”
Robinson said the likely connection is Chinese gangs who have flooded the U.S. with fentanyl and methamphetamine and have now outsourced the manufacturing and smuggling to the Mexican cartels.
“If I can’t do the duffle-bag trick, how am I going to launder money in your casino? The important thing is to make sure you don’t know how I’m doing it,” Robinson explained. “I asked myself, where is your vulnerability for someone that wants to do what we call trade-based money laundering, rather than the guests. With all the cameras on the front door, there are far fewer on the back door.”
Robinson said he focused on non-gaming suppliers, because they’re probably not scrutinized as closely. He said he even called the Nevada Gaming Control Board to see if that’s possible.
“They said we know every card supplier and every roulette supplier and every dice supplier,” Robinson said of the conversation. “You can’t supply a casino without getting past us.”
But what Robinson said isn’t scrutinized is “the boring stuff,” which can be as simple as paper napkins that no one is paying attention to at all. If a criminal organization bought a paper-manufacturing company and approached casinos with a deal that would save them millions of dollars on a higher-quality napkin, casinos would likely agree to that without knowing what’s happening, he said.
Then, the manufacturer produces accounting books that show it sold the napkins for a higher price than the casino paid, as a way to launder the money and make it legitimate, Robinson said.
“What do you think the headline is going to be if it ever hits the fan? Paper manufacturer launders money? No. World’s greatest Las Vegas casino caught in money- laundering paper-napkin scam. It’s going to be on the evening news and in every newspaper. Corporate is going to call and ask, ‘How did you get caught in this scam? This is terrible. Have you seen what happened tou our share price? Have you seen that our guest rate is down because no one wants to deal with a casino that’s laundering money? The Control Board is going to call and say we’re holding hearings. Congress is going to call. Your reputation is now in the toilet and you never saw it coming. Why not? Because you were thinking about money laundering. You weren’t thinking about this base crime of fraud.”
Robinson said it’s important for casinos to ask the right questions, which will lead to figuring out and identifying the money laundering. The right question in this case is, how can a company afford to sell this high-quality paper napkin at a lower price than we’ve been paying?
