Wynn Resorts Faces $130M Fine for Unlicensed Money Transfers

Wynn Resorts has agreed to a landmark $130,131,645 settlement to resolve long-standing criminal allegations tied to its involvement with unlicensed money transfers. Announced on September 6, the settlement comes as part of a Non-Prosecution Agreement (NPA) with prosecutors in California, marking what is believed to be the largest-ever forfeiture by a U.S. casino in connection with allegations of criminal misconduct. The legal battle centers on the financial dealings of Wynn Las Vegas (WLV), exposing a series of violations that have broader implications for the entire gaming industry.

Context and Significance of the Wynn Resorts Settlement

Wynn Las Vegas admitted to utilizing unregistered and unlicensed money transmitting businesses to help foreign customers bypass the conventional financial system, enabling high-net-worth individuals to evade U.S. laws designed to prevent illicit financial activities. This case sheds light on the ease with which major financial violations can occur within even the most heavily regulated industries, such as gaming.

Tara McGrath, the U.S. Attorney for the Southern District of California, highlighted the seriousness of these violations and the role of federal oversight in maintaining the integrity of the U.S. financial system. “Casinos, like all businesses, will be held to account when they allow customers to evade U.S. laws for the sake of profit,” McGrath said. Her comments reflect the broader regulatory environment, where institutions are expected to adhere to stringent financial reporting and anti-money laundering (AML) requirements.

The settlement is the result of a decade-long investigation that uncovered systemic illegal practices within WLV’s operations. While the resort has admitted to these financial violations, it will not face criminal charges, largely due to the agreement struck in the NPA. Instead, Wynn Resorts has pledged to implement more rigorous financial controls and severed ties with individuals involved in the illicit practices. The casino giant emphasized its cooperation with investigators and outlined a series of remedial measures aimed at preventing future violations.

Wynn Resorts and the Role of Unlicensed Money Transfers

The investigation into Wynn Resorts uncovered that WLV had regularly contracted with independent third-party agents who were operating as unlicensed money transmitting businesses. These agents played a crucial role in attracting high-rolling gamblers from abroad, particularly from Latin America. The arrangement involved the transfer of large sums of money through intermediaries—companies, bank accounts, and third-party nominees. This convoluted system allowed foreign gamblers to evade both U.S. and international monetary transfer laws.

According to the settlement, these funds were ultimately deposited into a WLV-controlled account in California before being transferred to the casino’s internal cage account. Once there, the funds were credited to the gamblers’ personal accounts at the casino, allowing them to gamble without ever having to declare or report the money. This complex scheme effectively circumvented both U.S. financial oversight and foreign exchange regulations, enabling foreign patrons to gamble in the U.S. without triggering legal scrutiny.

One particularly egregious example involved Juan Carlos Palermo, an independent agent who transferred $17.7 million on behalf of more than 50 patrons in over 200 transactions. Palermo’s operation, like others, relied on evading financial reporting laws, both in the U.S. and abroad, to facilitate these illegal transfers. This activity placed Wynn Resorts in direct violation of U.S. laws governing money transmission and reporting.

Christopher Davis, acting special agent in charge of Homeland Security Investigations (HSI) in San Diego, praised the outcome of the investigation, noting that it required extensive coordination between multiple agencies. “The success of this investigation is in part due to our partner agencies’ cooperation and dedication to seeing these long-term investigations through,” he said. Davis emphasized that holding criminals accountable for complex financial crimes is a top priority for HSI, particularly when those crimes undermine the integrity of U.S. financial institutions.

The Human Head Gambling Scheme

One of the most shocking aspects of the investigation was the uncovering of a scheme known as “Human Head” gambling. In this arrangement, an individual would purchase casino chips at WLV and gamble as a proxy for another person who was physically present but did not wish to gamble under their own name. This scheme was often employed by individuals who could not legally conduct financial transactions under federal Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations. In other cases, the proxy was used by individuals unwilling to reveal their identity due to the questionable source of their funds.

Federal regulations require casinos to monitor and report large or suspicious transactions, particularly when they involve substantial amounts of cash. Casinos must also scrutinize the identities of gamblers to ensure that funds are not being used for illicit purposes, such as money laundering. However, Wynn Las Vegas knowingly allowed the Human Head scheme to persist without conducting the required scrutiny, turning a blind eye to the source of funds or the identity of the true patrons. This failure to report and investigate suspicious activities directly violated federal laws and put the casino at risk of facilitating criminal enterprises.

The Flying Money Scheme and Cross-Border Transactions

Another key element of the investigation was the discovery of a cross-border scheme known as “Flying Money.” This practice involved unlicensed money transmitting businesses collecting U.S. dollars from third parties, which were then delivered in cash to WLV patrons. These individuals, often foreign nationals, were unable to access cash directly from U.S. banks or through traditional financial channels.

The Flying Money scheme allowed Wynn patrons to transfer equivalent sums of foreign currency from their overseas bank accounts to the unlicensed money processors. These transactions bypassed regulatory oversight, effectively allowing patrons to gamble with unreported and unmonitored funds. Like the Human Head scheme, Flying Money allowed Wynn patrons to evade financial reporting requirements, both in the U.S. and their home countries. Federal authorities were particularly concerned about the lack of scrutiny applied to these transactions, which could have facilitated money laundering, tax evasion, and other financial crimes.

The casino’s willingness to engage in these unlicensed and unregulated practices drew the attention of federal investigators. As part of the settlement, Wynn admitted to facilitating these transfers without filing Suspicious Activity Reports (SARs), which are mandatory under federal law for transactions that appear to involve illicit funds. Failure to file SARs is a serious violation of U.S. financial law, particularly in cases involving large sums of money or high-risk individuals.

Wynn’s Failure to Report Suspicious Activity

Federal prosecutors emphasized that Wynn Las Vegas had failed to meet its legal obligations to report suspicious financial activity on numerous occasions. One of the most notable cases involved a series of transactions in 2018, in which the casino facilitated $1.4 million in financial transfers for an individual who had previously been publicly linked to proxy gambling. Despite clear indications of potential criminal behavior, including the individual’s denial of entry into the U.S. due to suspected ties to organized crime, WLV allowed the transactions to proceed without reporting them to federal authorities.

Special Agent in Charge for IRS Criminal Investigation (IRS-CI) in Las Vegas, Carissa Messick, highlighted the importance of reporting suspicious financial transactions in maintaining the integrity of the U.S. financial system. “Deliberately avoiding Bank Secrecy Act requirements is a form of money laundering,” Messick stated. She underscored that federal financial regulations, such as the BSA, are designed to prevent illegal activities from taking place within U.S. businesses, including casinos.

The case against Wynn serves as a stark reminder of the importance of compliance with federal financial regulations. Casinos, like all financial institutions, have a legal responsibility to monitor and report suspicious transactions, particularly those involving large sums of money or high-risk individuals. Wynn’s failure to adhere to these regulations placed it in direct violation of the BSA, prompting the historic $130 million settlement.

Remedial Measures Taken by Wynn Resorts

Since the investigation began, Wynn Resorts has implemented a series of measures aimed at ensuring compliance with U.S. financial laws. The company has severed ties with any individuals implicated in the investigation and has introduced new internal controls to prevent similar violations from occurring in the future. According to Wynn, many of these changes were implemented before the NPA was finalized, reflecting the company’s desire to avoid further legal entanglements.

The case has had a profound impact on the gaming industry, particularly in terms of how casinos handle large-scale financial transactions. As federal authorities continue to increase their scrutiny of financial crimes, casinos are likely to face greater pressure to comply with regulations governing money transfers, suspicious activity reporting, and AML measures. Wynn’s settlement, while financially significant, also serves as a cautionary tale for other casinos that may be tempted to engage in similar practices.

Broader Implications for the Gaming Industry

Wynn Resorts’ historic settlement has far-reaching implications for the gaming industry as a whole. With the increasing globalization of gambling and the rise of international high rollers, casinos are under greater pressure than ever to ensure that their financial operations are transparent and in compliance with U.S. laws. The settlement underscores the risks that casinos face when they engage in illegal financial practices, particularly when it comes to money laundering and unlicensed money transmitting businesses.

Federal authorities have made it clear that they will not hesitate to hold businesses accountable for financial crimes, regardless of their size or prominence. The Wynn case serves as a stark reminder that even well-established companies are not immune to prosecution, and that adherence to financial regulations is not optional. Moving forward, the gaming industry is likely to see increased regulatory scrutiny and a greater emphasis on compliance with federal financial reporting and AML laws.

Conclusion

In conclusion, Wynn Resorts' $130 million settlement marks a significant chapter in the casino industry’s ongoing struggle with regulatory compliance and financial transparency. By admitting to illegal practices involving unlicensed money transfers, Wynn underscores the risks that even major corporations face when failing to adhere to federal financial laws. This case serves as a stark reminder to the gaming industry of the critical importance of compliance with anti-money laundering regulations and the consequences of turning a blind eye to suspicious financial activities.

FAQs:

What was the settlement amount Wynn Resorts agreed to pay?
Wynn Resorts agreed to pay $130,131,645 to settle allegations involving unlicensed money transfers.

Why did Wynn Resorts face legal action?
Wynn Resorts faced legal action for using unlicensed money transmitting businesses to facilitate illegal financial transactions for foreign gamblers.

What is a Non-Prosecution Agreement (NPA)?
An NPA is an agreement between a prosecutor and a company, where the company avoids prosecution in exchange for fulfilling certain conditions, such as paying a fine.

What is Human Head gambling?
Human Head gambling involves one individual purchasing chips and gambling on behalf of another person who cannot or will not engage in the activity under their own identity.

What was the Flying Money scheme?
The Flying Money scheme allowed third-party money processors to deliver cash to Wynn patrons, who then electronically transferred the equivalent value in foreign currency.

Did Wynn Resorts face criminal charges?
No, Wynn Resorts did not face criminal charges as part of the settlement. However, they admitted to using unlicensed money transmitting businesses.

What are Suspicious Activity Reports (SARs)?
SARs are reports that financial institutions must file when they detect potential money laundering or other suspicious activities in financial transactions.

Why was Wynn investigated for proxy gambling?
Wynn was investigated for allowing patrons to engage in proxy gambling, where one individual gambled on behalf of another person, often to evade legal restrictions.

What measures has Wynn taken since the investigation?
Wynn has severed ties with individuals implicated in the investigation and implemented financial controls to ensure compliance with federal laws.

What is the significance of this settlement for the casino industry?
The settlement highlights the importance of financial transparency and compliance with regulations to prevent illegal activities in the casino industry.