Two Las Vegas casino resorts, the MGM Grand and The Cosmopolitan, will pay a combined settlement of $7.45m for violating AML requirements relating to an illegal sports betting operation.
The Central District of California of the US Attorney’s Office detailed yesterday that the casinos had failed to meet Bank Secrecy Act (BSA) requirements around reporting suspicious transactions.
Scott Sibella, the former President of the MGM Grand, had pleaded guilty the day before to failing to report suspicious transactions during his tenure in corporate leadership between August 2017 and February 2022.
First Assistant United States Attorney, Joseph McNally, remarked: “Financial institutions have a duty under the law to report criminal or suspicious activity occurring at the institution through SARs.
“Our office will aggressively prosecute corporate executives and employees who turn a blind eye to criminal actors depositing illegal funds at casinos and financial institutions.”
The charges against Sibella and subsequent legal action against MGM Grand and Cosmopolitan relate to an illegal bookmaking operation run by Wayne Nix.
Sibella admitted to being aware that Nix was the organiser of an illegal sports betting ring but continued to allow the man to gamble at casino facilities under his watch.
Nix had been found guilty of illegal gambling in 2022, at which time Sibella was found to have informed law information that he ‘didn’t want to know because of my position’.
He further informed authorities: “If we know, we can’t allow them to gamble…. I didn’t ask, I didn’t want to know I guess because he wasn’t doing anything to cheat the casino.”
By allowing Nix to gamble at the Grand, casino management failed to meet source of funds (SOF) checks and may have enabled criminal proceeds from illegal gambling to be transacted on the casino floor.
Meanwhile, Cosmopolitan management also admitted that a casino host had been aware of Nix’s illegal business and had subsequently allowed him to gamble with illicit funds without notifying the company’s compliance department.
Investigators found that the casino had accepted $928,600 from Nix, all of which investigators claim originated from his illegal gambling activity, by 2020.
Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office, explained: “Mr Sibella’s willful violation of Bank Secrecy Act obligations to report suspicious activities put the credibility of the MGM Grand at risk.
“The BSA mandates reporting of suspicious activities to protect financial institutions from becoming participants in money laundering activities often benefitting criminal or terrorist organisations.
“While president of MGM Grand, Mr Sibella undermined the trust and confidence of his employees, customers and regulating agencies, and for that, he will be held accountable.
“Additionally, the non-prosecution agreements with MGM Grand Hotel, LLC and The Cosmopolitan of Las Vegas should serve as notice to other casinos and financial institutions that evading BSA obligations can carry severe consequences, and we will investigate suspected non-compliance.”
At the close of the investigation, MGM Grand and Cosmopolitan agreed to pay monetary fines of $6,527,729 and $928,600, respectively. Both casinos have also forfeited $500,000 each in proceeds traceable to the AML breaching activity.
