FinCEN Fines Caesars Palace $8 Million for “Severely Deficient” Internal Controls on Gaming by Wealthy Clientele

September 9, 2015

The Financial Crimes Enforcement Network (FinCEN) announced an $8 million settlement with Desert Palace, Inc. d/b/a Caesars Palace (Caesars), in which Caesars, the Las Vegas hotel and casino, was found to have willfully violated its Bank Secrecy Act (BSA) requirements to develop and implement a reasonably designed anti-money laundering (AML) program and to report suspicious activity. This is the second multi-million dollar AML penalty imposed by FinCEN on a casino since June and the third this year.
According to FinCEN, Caesars maintained “severely deficient” internal controls on its private gaming salons, which are exclusive gaming areas reserved only for Caesars’ “wealthiest—and riskiest—clientele.” The private gaming salons were offered exclusively for patrons with a front money deposit or line of credit of at least $300,000, and FinCEN noted that these salons pose significant money laundering risks because of the wealthy nature of the clientele and the significant levels of gambling. Caesars also allowed “team play” at the salons, which allowed unknown guests of private gaming salon patrons to use the account of a primary patron to gamble significant sums of money, thereby enabling such guests to conceal their identity and transactions. In addition, Caesars marketed these private gaming salons to wealthy prospective patrons through branch offices located in the United States and abroad, particularly in California and Asia, but failed to adequately monitor transactions conducted through these offices for suspicious activity. As a result, Caesars failed to file a large number of suspicious activity reports (SARs) on a broad range of suspicious transactions, including large dollar wire transfers. 
FinCEN cited Caesars’ failure to use “all available information” on its patrons for purposes of its AML compliance. Although Caesars’ marketing department would typically obtain information about the casino’s wealthy patrons for marketing purposes, Caesars did not use this information to identify and evaluate potentially suspicious activity or otherwise incorporate it into the casino’s AML controls. FinCEN also determined that Caesars failed to conduct adequate independent testing of its AML compliance program and to provide adequate BSA training for its employees, including staff who are key to BSA compliance.
In addition to the $8 million civil money penalty, Caesars agreed to undertake various improvements to its AML program, engage an independent consultant to review and conduct independent testing of its AML program, report to FinCEN on its AML program (including its various AML improvement initiatives) and its responses to issues raised by the independent consultant’s review, provide FinCEN with a copy of its AML training program, and conduct a lookback for suspicious transactions at its branch offices in California and Asia in 2012, 2013 and 2014 (and, as appropriate, file, or amend previously filed, SARs based on the results of the lookback). The consultant is to perform a total of four reviews – the first commencing within 60 days of the consent agreement, and then annually thereafter for the next three years, and the reporting obligation also runs for three years.