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October 17, 2017

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Caesars Palace to pay $9.5 million in fines for money laundering violations

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L.E. Baskow

One of the many sculptured angels about the exterior of Caesars Palace on Wednesday, August 5, 2015.

Caesars Palace has agreed to pay a total of $9.5 million in fines for failing to properly guard itself against money laundering.

The Treasury Department’s Financial Crimes Enforcement Network — also known as FinCEN — today announced the casino will pay $8 million for “willful and repeated violations” of federal anti-money laundering law. A.G. Burnett, chairman of the Nevada Gaming Control Board, said Caesars Palace will pay the state a separate $1.5 million penalty for the same violations.

In a statement announcing the settlement, FinCEN referenced multiple ways in which Caesars Palace allowed “systemic and severe” gaps to develop in its anti-money laundering practices. Specifically, FinCEN said Caesars Palace tolerated a “blind spot” created by private gaming salons where high rollers were openly permitted to gamble anonymously.

Even though the private salons were at greater risk of being used by criminals trying to disguise the flow of illicit funds, FinCEN said, Caesars Palace neglected to apply proper scrutiny and “allowed some of the most lucrative and riskiest financial transactions to go unreported.”

Additionally, FinCEN said Caesars Palace promoted the private salons through branch offices in the United States and abroad, but did not appropriately monitor transactions such as large wire transfers for suspicious activity.

“Caesars knew its customers well enough to entice them to cross the world to gamble and to cater to their every need,” said FinCEN Director Jennifer Shasky Calvery in the statement. “But, when it came to watching out for illicit activity, it allowed a blind spot in its compliance program. Every business wants to impress its customers, but that cannot come at the risk of introducing illicit money into the U.S. financial system.”

Beyond the $8 million fine that Caesars Palace agreed to with FinCEN, the casino also agreed to periodic external audits and independent testing of its anti-money laundering practices. The casino will report to FinCEN on required improvements, institute a “rigorous training regime” and conduct a “look-back” for suspicious transactions, according to FinCEN.

Caesars Palace is controlled by the division of Caesars Entertainment Corp. that filed for bankruptcy in mid-January. Accordingly, the bankruptcy court needs to approve the casino’s consent agreement, FinCEN said.

Caesars Palace said in a statement emailed by a spokesperson that it has made “substantial improvements” to its anti-money laundering program, which it continues to enhance.

“The entire Caesars organization is committed to full compliance with the requirements applicable to casinos and to taking effective risk-based measures to prevent and detect money laundering,” the company statement said.

Caesars Palace first revealed it was under investigation for money laundering failures in 2013. Earlier this year, Caesars Entertainment said the casino could be hit with multi-million dollar fines as a result of FinCEN’s investigation.

Caesars is not the only casino company that has faced governmental scrutiny of its anti-money laundering procedures in recent years. In 2013, for example, Las Vegas Sands Corp. — which runs the Venetian and Palazzo on the Strip — agreed to pay $47.4 million to settle a money laundering investigation.

In 2014, Shasky Calvery told the gaming industry that it needed to adopt a “strong culture of compliance” in the realm

of anti-money laundering practices. Earlier this year, the director of FinCEN’s enforcement division said the gaming industry has made “meaningful improvements,” but more work remained.

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