By Christine Duhaime, B.A., J.D., Gaming Attorney & Certified Anti-Money Laundering SpecialistFollow @cduhaime
The U.S. Department of Justice ("DOJ") announced that it has resolved its money laundering investigation into the Las Vegas Sands Corp. (“Sands”) pursuant to which Sands will pay US$47 million to avoid criminal prosecution in connection with funds gambled by high rollers at its Venetian casino in Las Vegas.
The DOJ was investigating Sands for failure to file suspicious activity reports ("SAR") under the Bank Secrecy Act in respect of at least one high roller - Zhenli Ye Gon. Ye Gon, a Chinese-Mexican businessman, lost more than US$125 million at multiple casinos in Las Vegas.
The Bank Secrecy Act requires casinos with annual revenue of at least US$1 million to file a SAR for every transaction or group of related transactions totaling US$5,000 or more, when the casino knows, suspects, or has reason to suspect that the transaction:
- Involves funds derived from illegal activity, or is intended to conceal funds derived from illegal activity;
- Is intended to avoid or prevent the filing of a Currency Transaction Report for Casinos;
- Has no business or apparent lawful purpose, or is not the sort in which that particular customer would normally be expected to engage; or
- Involves the use of the casino to facilitate criminal activity.
Ye Gon is alleged to have received as much as US$100 million at the Sands which was allegedly proceeds of crime tied to the manufacture of synthetic drugs. In March 2007, US$207 million cash was seized from Ye Gon’s residence in Mexico by law enforcement authorities - the largest-ever seizure of cash.
During his patronage at the Venetian, Ye Gon wire transferred money to Sands and subsidiary companies from two different banks and seven different Mexican money exchange houses, known as casas de cambios. The wire transfer originators included several companies and individuals the Sands could not link to Ye Gon.
According to the DOJ, Ye Gon also transferred funds from Mexican casas de cambios to a Sands subsidiary in Hong Kong for transfer to Las Vegas. In many instances, Ye Gon’s wire transfers lacked sufficient information to identify him as the beneficiary. The Sands also allowed Ye Gon to transfer funds several times to an account that did not identify its association with the Venetian, specifically an aviation account used to pay pilots operating the company’s aircraft.
Earlier this year, the Sands retained a new director of investigations, formerly with the Gaming Control Board, to oversee its compliance program. And in January, it stopped international money transfers for high rollers.
The DOJ has signaled that more investigations into casino anti-money laundering compliance are likely.
“What happens in Vegas no longer stays in Vegas,” said U.S. Attorney André Birotte Jr. “For the first time, a casino has faced the very real possibility of a federal criminal case for failing to properly report suspicious funds received from a gambler. This is also the first time a casino has agreed to return those funds to the government. All companies, especially casinos, are now on notice that America’s anti-money laundering laws apply to all people and every corporation, even if that company risks losing its most profitable customer.“