The gaming industry faced an unprecedented wave of enforcement actions in 2024 as regulators and federal prosecutors cracked down on Anti-Money Laundering (AML) compliance in casinos across the country. This heightened scrutiny underscored a clear message: casinos must strengthen their AML practices, invest in technology, and embrace rigorous compliance standards to prevent financial crime.
MGM Grand and The Cosmopolitan: non-prosecution agreement
2024 began with the news that the MGM Grand and The Cosmopolitan had entered into non-prosecution agreements (NPA) with the Central District of California U.S. Attorney’s Office after an illegal bookmaker named Wayne Nix frequented both properties without attracting sufficient scrutiny. Nix’s activities included bringing in substantial amounts of cash, soliciting clients, and maintaining ties with the MGM Grand’s former president.
As part of the NPA, the properties agreed to penalties exceeding $7 million, representing twice the amount associated with revenue from Nix’s activities. Additionally, MGM committed to improving its AML compliance program through various measures, including hiring an external compliance monitor, conducting a Suspicious Activity Report (SAR) look-back, and enhancing its risk-based approach.
Casino executive: criminal prosecution
The former president of MGM Grand, Scott Sibella, pled guilty to Bank Secrecy Act (BSA) violations related to the Wayne Nix case and was sentenced to one year of probation and a $9,500 fine in May of this year. In addition, Sibella’s gaming license is currently under review, and he may be subject to additional regulatory sanctions.
Resorts World: Nevada Gaming Control Board complaint
In August, the Nevada Gaming Control Board (NGCB) filed a disciplinary complaint against Resorts World Las Vegas, citing significant AML shortcomings. The complaint alleged that Resorts World allowed a known illegal bookmaker, Mathew Bowyer, to gamble over an extended period without any due diligence being conducted on his source of funds or appropriate action being taken by the property’s compliance committee.
In addition to an ongoing federal investigation related to the allegations in the NGCB complaint, Resorts World now faces possible penalties that may include fines and restrictions on its gaming license.
Wynn: forfeiture and enhanced AML compliance measures
The largest penalty in the domestic gaming industry to date came in September, with Wynn Resorts agreeing to forfeit $130 million as part of an NPA with the Southern District of California U.S. Attorney’s Office. In an agreed statement of facts, Wynn faced significant repercussions for conspiring to operate unregistered money service businesses and using illegal money transmitters going back to 2014. This allowed foreign gamblers to gamble with funds sourced through illicit channels.
The NPA acknowledged that Wynn was cooperative with the investigation and had made a number of staffing changes and improvements to its AML program since 2014. Under the NPA, the company is required to improve its compliance technology infrastructure, increase personnel resources, enhance BSA/AML training, and undergo external reviews with mandated reporting to the U.S. Attorney’s Office.
Lake Elsinore Casino: Civil Money Penalty and program overhaul
Lake Elsinore Casino, a small California card room, was issued a $900,000 civil money penalty by the Financial Crimes Enforcement Network (FinCEN) in October for failing to establish an effective AML compliance program. The casino neglected to file necessary CTRs and SARs, had outdated AML policies and lacked training and internal controls essential for effective risk management.
To address these deficiencies, Lake Elsinore agreed, at its own cost, to engage a FinCEN-approved consultant to review and revamp its AML program. The casino committed to implementing the consultant’s recommendations to improve compliance.
Lessons learned and future expectations
Each of these cases demonstrates the substantial repercussions that casinos face for failing to adhere to AML requirements. Key lessons for the gaming industry include:
- Enhanced KYC and Source of Funds Verification: Casinos must proactively verify the source of large cash inflows and apply rigorous Know Your Client (KYC) practices, especially for high-stakes patrons.
- Strong Internal Controls and Training Programs: AML programs must include comprehensive internal controls and regular training to ensure employees understand and adhere to compliance obligations.
- Robust Technology and Monitoring Capabilities: Casinos need advanced technology and real-time monitoring systems to effectively identify risks and detect suspicious activities. Of note, nearly all the enforcement actions taken against casino operators have required them to invest in or upgrade their AML technology.
- Executive Accountability: Executives have a duty to enforce compliance measures and can be held accountable for lapses that facilitate illegal activities.
- Costly Remediation and External Monitoring: Inadequate compliance can lead to costly penalties, forced remediation, and mandatory external monitors, underscoring the importance of proactive risk management.
As these cases make clear, regulatory bodies have set high standards for AML compliance across the gaming industry, signaling their intent to impose significant penalties on operators who fail to adhere to these standards. Of note, these enforcement actions all unfolded while the U.S. Treasury Department released two significant publications this year that specifically call out gaming: The National Money Laundering Risk Assessment and the National Illicit Finance Strategy.
Gaming organizations should prepare for continued regulatory focus in 2025 as state and federal agencies enhance their scrutiny to curb financial crime within the industry.
