Compliance teams try to strike balance in wake of RWLV settlement

Addressing the Complexities of AML Compliance: A Case Study of Resorts World Las Vegas

In the evolving landscape of the gambling industry, the intersection of escalating operational costs and the rigorous demands of anti-money laundering (AML) compliance poses significant challenges for casinos. This dynamic was starkly illustrated in the discussions surrounding the recent settlement between the Nevada Gaming Commission (NGC) and Resorts World Las Vegas (RWLV).

The spotlight on RWLV, a premier property on the Las Vegas Strip, has intensified due to various civil complaints highlighting serious financial improprieties. This has prompted regulators to raise concerns regarding the integrity of the industry as a whole. A Nevada commissioner even branded these events a potential “wake-up call” for casino operators nationwide.

Considering the gravity of the allegations against RWLV, state regulators contemplated extreme measures, including conservatorship—one of the harshest penalties available—or a staggering $100 million fine accompanied by a license suspension. Ultimately, the NGC imposed a $10.5 million fine, marking it as the second-largest in Nevada’s history.

This settlement dominated discussions at the recent Indian Gaming Tradeshow & Convention, the largest gathering for tribal gambling professionals in the U.S. The NGC’s stipulated settlement, finalized on March 27, addressed a comprehensive 12-count regulatory complaint centered on the casino’s AML deficiencies, which were further complicated by the state’s ongoing investigation into illegal sports betting in Southern California.

No Admissions of Wrongdoing

In July, the Nevada Gaming Control Board issued a multi-count complaint against RWLV—an expansive, 117,000-square-foot casino that opened in 2021 for a staggering $4.3 billion. The center of the complaint involved associations with two illegal bookmakers, both facing federal money laundering charges.

One key figure, Matt Bowyer, attracted significant media attention due to his connections with Ippei Mizuhara, a former interpreter for MLB star Shohei Ohtani. During a three-year span, Mizuhara placed approximately 19,000 bets through Bowyer’s illicit sportsbook, totaling over $325 million. Notably, Bowyer reportedly gambled at RWLV on at least 80 occasions, incurring losses of at least $7.9 million, as stated in the regulatory complaint.

Mizuhara’s own legal troubles included embezzling more than $16 million from Ohtani to fuel his gambling addiction, leading to his 57-month prison sentence earlier this year. The regulatory scrutiny highlighted that RWLV’s AML committee failed to verify the source of Bowyer’s funding or conduct necessary Know Your Customer (KYC) checks, raising red flags about the casino’s compliance practices.

The NGC ratified the settlement unanimously, with Commissioner Abbi Silver recusing herself due to her prior relationship with Scott Sibella, RWLV’s former president, who himself was sentenced to probation in connection with AML violations during his past tenure at MGM Grand. Crucially, RWLV has not admitted to any wrongdoing in light of these findings.

Striking a Balance

During the tribal conference, a panel dedicated to AML issues dissected RWLV’s situation, emphasizing the need for compliance teams to develop practical remediation strategies that do not disrupt business functions. Anne Layne, Senior Manager at Grant Thornton, reinforced this by noting that compliance measures should aim to prevent future infractions rather than merely passing regulatory examinations.

One proposed solution involved hiring independent AML monitors to oversee operations and address suspicious activities in real-time. While this could enhance compliance efforts, Layne cautioned that the cost of such oversight might prove prohibitive, potentially obstructing a casino’s operational capacity and revenue generation—a concern shared by regulatory bodies aiming to sustain tax revenues from these establishments.

“While ensuring compliance is crucial, maintaining business viability is equally important. It’s essential to achieve a balance,” Layne articulated.

A Federal Settlement on the Horizon?

Joining Layne on the panel was Sean Topchi, Director of Business Development at Kinectify, who provided insights informed by his previous role as the Bank Secrecy Act officer for Morongo Casino Resort & Spa. Tapping into his expertise, Topchi revealed that RWLV has made substantial remediation efforts, including an overhauled corporate governance structure.

Nevada regulators retain the option to revisit the settlement should further civil or criminal actions arise at the federal level. Commissioner Brian Krolicki highlighted this aspect as pivotal in negotiations, while Topchi speculated that the ongoing federal investigation could soon lead to a significant settlement by the Justice Department.

Meanwhile, in a related session, federal prosecutor Jeff Mitchell presented on AML combat strategies, emphasizing complex cases linked to Mizuhara and Sibella without delving into Bowyer’s case, which has been postponed until October. This suggests ongoing investigations could have lasting implications for the casino’s standing and compliance obligations.

Amidst these developments, the federal government under the Biden administration reportedly evaluated the possibility of imposing a nine-figure fine against RWLV, though the current status of negotiations remains uncertain, partly due to recent changes in Justice Department leadership.

As the gambling industry grapples with mounting compliance costs juxtaposed against operational efficiencies, the ongoing developments surrounding RWLV serve as a critical case study for regulators, operators, and compliance teams alike.