Caesars Entertainment Money Laundering Allegations Could Cost Operator Millions in Fines

Posted on: May 12, 2015, 01:39h. 

Last updated on: May 12, 2015, 01:42h.

Casino.org Staff Writer Read More
Expertise: Commercial Gaming.
Caesars money laundering investigation fine
Caesars is likely to pay a fine of between $12 million and $20 million for failing to implement proper anti-money laundering measures at their flagship Las Vegas property. (Image: it.wikipedia.org)

Caesars Entertainment Corp. could be subjected to millions of dollars in fines as the company tries to settle money laundering allegations it faces from the federal government. The gaming operator is currently in talks with US authorities over how to settle the claims, which could lead to a fine somewhere in the range of $12 million to $20 million.

Talks, which have been conducted between the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury, were most recently held on April 29 and were revealed in the company’s latest Securities and Exchange Commission filing. A federal grand jury investigation into the allegations is also ongoing.

“The company and Caesars Palace have been fully cooperating with both the FinCEN and grand jury investigations since October 2013,” Caesars said in its filing.

Investigation Began in 2013

Back in 2013, FinCEN first informed Caesars that it was investigating the company for alleged violations of the Bank Secrecy Act, an anti-money laundering law. At the time, it was unclear what, if any, penalties would emerge from the investigation.

FinCEN has long felt that casinos have done a poor job of preventing money laundering at their establishments. In August of 2013, the Las Vegas Sands Corp. reached a deal with federal prosecutors that saw the company pay a $47.4 million settlement in order to avoid criminal charges after allegations of money laundering at the Venetian in 2006 and 2007.

Other companies have been contacted by federal authorities as well. Last year, Wynn Resorts said they were sent a letter from the IRS requesting information about their biggest customers, though they say the government hasn’t followed up in the matter.

The investigations haven’t been limited to Las Vegas casinos, either. In March, FinCEN levied a $10 million penalty against the Trump Taj Mahal after the casino admitted to similar lapses in anti-money laundering standards.

Allegations Minor Factor in Massachusetts Failure

As for Caesars, the allegations are likely to end with the fine being the only tangible punishment for any lapses in their anti-money laundering policies. Given the size of the company, that shouldn’t be more than a blip on their financial reports.

“We expect that any financial penalties imposed upon Caesars Palace would not impact Caesars Entertainment’s financial results,” the company said.

However, the investigation may have had other implications for the company in the past. Back in 2013, Caesars was partnered with Suffolk Downs in an effort to bring a casino to East Boston.

But in October of that year, Caesars was dropped from the bid. Suffolk Downs said that the decision was based on the results of a Massachusetts Gaming Commission background investigation into Caesars.

The main issue found there appeared to be Caesars’ connections with the Gansevoort Hotel Group, a company partly owned by Arik Kislin, a man said to have ties to Russian organized crime. However, the FinCEN allegations were also revealed in the same month, suggesting that they could have been among the variety of issues that the Massachusetts Gaming Commission said they had with the Caesars bid.

Caesars Entertainment Operating Corp. filed for bankruptcy in January, and is currently trying to reduce the massive debt load held by the company. A restructuring could reduce the amount of debt held by CEOC by nearly $10 million.