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Caesars nears deal over anti-money laundering lapses

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The U.S. Treasury Department’s anti-money laundering unit may soon issue a civil penalty to Caesars Entertainment (CZR) over anti-money laundering lapses unearthed during a probe underway for roughly two years, two sources familiar with the matter said.

The final details of a settlement agreement are being ironed out, said the sources, who spoke on condition of anonymity as they were not authorized to publicly discuss the matter. One of the sources said the company was not expected to be required to fire any employees. It is unclear whether Treasury’s Financial Crimes Enforcement Network (FinCEN) will require the company to make improvements to its compliance program.

The sources added that the Justice Department, which had also been probing the casino company, does not appear poised to take any punitive action.

FinCEN and the Justice Department in recent years have been working to tighten anti-money laundering compliance in the casino industry due to a perception that criminals around the world are moving large sums of ill-gotten gains through casino properties.

Steve Hudak, a spokesman for FinCEN, declined to comment on Caesars Entertainment, as did spokesmen for Caesars and the Justice Department.

The sources said they did not know how much Caesars would be expected to pay as part of the terms of a deal. The investigation stemmed in part from failures to properly police sports book activity and prevent wagers being placed by illegal betting rings, one of the sources said.

The fact that Caesars’ operating unit, Caesars Entertainment Operating, filed for Chapter 11 bankruptcy earlier this year could mean the company will not pay the full amount of whatever penalty is assessed as the penalty would likely be unsecured debt, the same source said.

This source added that because alleged Caesars’ anti-money laundering failures were “very serious,” any settlement that did not result in dismissals or jail time for any individuals would amount to “a slap on the wrist.” It is unclear whether any employees were individually investigated as part of the FinCEN or Justice Department probes.

In October 2013, Caesars disclosed that FinCEN was investigating the Desert Palace Inc unit, which runs the flagship Caesars Palace casino in Las Vegas, over alleged failures to comply with the Bank Secrecy Act, the primary U.S. anti-money laundering law. Caesars also said a federal grand jury was investigating the matter.

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