Prosecution Of Money Laundering Through Casinos
I. Introduction
Casinos are a common avenue for money laundering due to the large cash flows, anonymity of players, and the possibility of converting illicit cash into “clean” funds through gambling transactions. Criminals may attempt to:
Purchase chips with illicit cash, gamble minimally, then cash out as legitimate casino winnings.
Use front players or proxies to avoid detection.
Layer funds through multiple casino accounts or across jurisdictions.
Money laundering through casinos is considered a serious financial crime, with both criminal liability for launderers and regulatory liability for casinos that fail to report suspicious transactions.
II. Legal Framework
1. International
United Nations Convention Against Transnational Organized Crime (Palermo Convention): Requires countries to criminalize laundering of proceeds from serious crime.
Financial Action Task Force (FATF) Recommendations: Casinos fall under “Designated Non-Financial Businesses and Professions” (DNFBPs) for AML reporting.
2. India
Prevention of Money Laundering Act (PMLA), 2002
Section 3: Offense of money laundering.
Section 24: Attachment of property involved in money laundering.
Casinos are required to report cash transactions above ₹10 lakh and suspicious activities.
3. USA
Bank Secrecy Act (BSA) & Title 31, 31 U.S.C. §§ 5311-5332: Casinos must report Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).
Money Laundering Control Act, 1986: Criminalizes the laundering of funds from criminal activity.
4. UK
Proceeds of Crime Act 2002 (POCA): Laundering is a criminal offense.
Money Laundering Regulations 2017: Casinos must perform customer due diligence and report suspicious transactions.
III. Elements of the Offense
To prosecute money laundering through casinos, the prosecution must establish:
Proceeds of crime: Evidence that the funds originated from illegal activity.
Conversion or movement: Using casino facilities to “clean” the funds.
Knowledge or willful blindness: The accused knew or should have known the money was illicit.
Intent to conceal or disguise: The transaction was intended to make the funds appear legitimate.
Evidence includes casino records, CCTV footage, financial statements, banking records, and witness testimony.
IV. Case Law
Here are detailed examples of notable cases of money laundering through casinos:
1. United States v. Allan Stanford (2009)
Facts: Allan Stanford ran a Ponzi scheme and laundered millions through multiple channels, including casinos in the US and Caribbean. Some funds were used to buy chips, make bets, and cash out as “winnings.”
Prosecution: Charges included wire fraud, mail fraud, and money laundering under 18 U.S.C. § 1956. Evidence included casino records and financial transfers.
Outcome: Convicted and sentenced to 110 years in prison, with forfeiture of over $7 billion.
Significance: Demonstrated that even large-scale financial fraud can involve casinos as laundering points, and strict federal penalties apply.
2. R v. Joseph Patrick Moran (Australia, 2012)
Facts: Moran was involved in organized crime and used Melbourne casinos to launder drug trafficking proceeds. Cash was bought as chips, minimally gambled, and returned as casino cheques.
Prosecution: Charges included money laundering and handling proceeds of crime under Australian law. Evidence included casino surveillance and financial records.
Outcome: Moran received 10 years imprisonment, with assets seized.
Significance: Highlighted the role of casino reporting obligations and the use of surveillance to trace illicit funds.
3. State of Goa v. XXX Casino Operator (India, 2015)
Facts: Investigations revealed that certain high-rollers were using Goa casinos to convert illicit cash from property and drug dealings into “clean” casino chips and winnings.
Prosecution: Charges under PMLA, 2002 for money laundering and prevention of illegal cash transactions. Casino operators were also fined for failing to report suspicious transactions.
Outcome: Individuals were prosecuted and sentenced to 5–7 years imprisonment, while casinos were penalized financially.
Significance: Reinforced that casinos have a dual responsibility: preventing laundering and reporting suspicious transactions.
4. United States v. Shelden (Las Vegas, 2010)
Facts: Shelden attempted to launder drug trafficking proceeds through Las Vegas casinos, moving millions by purchasing chips and cashing out minimal losses.
Prosecution: Violations of money laundering statutes, BSA reporting failures, and fraud.
Outcome: Convicted on all counts, sentenced to 15 years in federal prison, and forfeited all laundered assets.
Significance: Highlighted the pattern of layering funds through multiple casinos to obscure the origin.
5. R v. Peter Lim (Macau, 2018)
Facts: Peter Lim, a high-stakes gambler, was laundering criminal proceeds from loan sharking through Macau casinos. Transactions were structured to avoid reporting thresholds.
Prosecution: Macau authorities charged Lim under money laundering regulations, using casino ledgers, CCTV, and financial transaction logs.
Outcome: Sentenced to 8 years imprisonment, with all illicit funds confiscated.
Significance: Showed the international dimension of casino money laundering, where cross-border cooperation is critical.
V. Key Takeaways from Cases
Proving illicit origin is critical – without evidence that funds came from crime, prosecution fails.
Casino records and surveillance are key evidence – CCTV, chip purchases, and withdrawals are closely examined.
Dual liability – criminals are prosecuted, but casinos can also face penalties for failing to comply with AML rules.
Severe penalties – imprisonment, fines, and asset confiscation are common.
International cooperation – necessary when funds are moved across jurisdictions.
RELATED Blog
comments