Regulators OK $1.5 million fine against Caesars for weak anti-money-laundering procedures

Exterior of Caesars Palace on Wednesday, August 5, 2015.

Nevada regulators today approved a $1.5 million state fine against Caesars Entertainment Corp. because of lapses in the company’s anti-money-laundering efforts.

The Treasury Department’s Financial Crimes Enforcement Network, also known as FinCen, announced last week that Caesars would be fined an $8 million federal penalty for failing to properly defend itself against money laundering at its flagship Caesars Palace casino. The Nevada Gaming Commission today approved the additional state penalty Caesars agreed to pay over the same charges, which dealt in part with private gaming salons at Caesars Palace that catered to high rollers.

FinCen called the private salons a “blind spot” and said that even though they posed a greater risk of being used to mask the movement of illicit funds, Caesars Palace “allowed some of the most lucrative and riskiest financial transactions to go unreported.” Federal law requires casinos to report certain potentially suspicious transactions to the government.

Similarly, a 15-count complaint from the Gaming Control Board justifying the state fine said that Caesars — per FinCen’s judgment — permitted “highly deficient internal controls” on the private salons, where some of the casino’s wealthiest patrons gambled.

“Due to the deficient internal controls, Caesars failed to detect and report a wide range of suspicious transactions,” the complaint said. “The controls Caesars had in place for private gaming salons were not sufficient for the heightened risk presented by the transactions which occur in private gaming salons.”

Additionally, Caesars promoted its high-end gambling through branch offices in the United States and abroad but did not properly monitor them, according to the complaint. That allowed “a number of suspicious transactions associated with Caesars’ wealthiest foreign patrons” to go undetected and unreported, the complaint said.

Attorney Mark Clayton told the gaming commissioners that Caesars has taken “extensive measures” to fully comply with federal anti-money-laundering law, both at Caesars Palace and across the company. Caesars has improved “every aspect” of its efforts in the area, Clayton said, including by hiring an executive devoted to anti-money-laundering compliance.

Commission chairman Tony Alamo warned Caesars against making similar mistakes in the future.

“You shot yourself in the foot on this one,” Alamo said. He added that he believed the fine was one of the top five the state has ever assessed.

Caesars Palace is owned by Caesars Entertainment Operating Co., the bankrupt division of Caesars Entertainment Corp. Clayton said the $1.5 million state fine, levied on the parent company, does not require bankruptcy court approval.

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J.D. Morris can be reached at 702-990-7714 or [email protected]. Follow J.D. on Twitter at twitter.com/thejdmorris.

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