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California cardroom pays $3.1m to settle AML case


California Attorney General Xavier Becerra has announced the Los Angeles-based cardroom Hawaiian Gardens Casino has agreed a $3.1m settlement with his office for misleading gambling regulators.

The venue was also found to have violated the Bank Secrecy Act, a federal law aimed to combatting money laundering.

In the settlement, Becerra (pictured) explained how the casino failed to disclose a Financial Crimes Enforcement Network (FinCEN) investigation into its practices, and also attempted to deceive the California Department of Justice for a number of years.

California’s Gambling Control Act of 1998 states casinos must “make full and true disclosure” of any legal issues to regulators. However, according to the Attorney General, Hawaiian Gardens failed to report, reveal, or disclose to the Bureau of Gambling Control (BGC) certain information for a number of years.

Hawaiian Gardens did not state that FinCEN or another federal agency was examining the casino in relation to the Bank Secrecy Act, nor that the casino and FinCEN were involved in negotiations that could result in the casino’s admission of Bank Secrecy Act violations. Becerra noted the casino admitted to breaching the Act as part of the settlement agreement.

The casino was also found to have submitted a number of applications for license renewals to the BGC, none of which disclosed this information. However, the Attorney General said when the BGC requested this information from the casino in August 2016, the casino said that it had “always engaged in frank and honest dialogue with the regulators”.

The Attorney General ruled that the failure to disclose information, as well as the admittance to breaching the Bank Secrecy Act violated its responsibilities under the Gambling Control Act.

Hawaiian Gardens was ordered to pay a penalty of $3.1m, as well as reimburse the BGC for costs associated with the case and complete a 24-month compliance period. Becerra noted that the casino’s license in the state will be contingent upon meeting these terms.

“There’s no excuse for failing to comply with the law and deliberately attempting to mislead regulators,” Becerra said. “In the gaming world, if you fail to play by the rules, expect to pay the price. Hawaiian Gardens Casino is paying the price.

“At the California Department of Justice, we will do all we can to prevent the marriage of money laundering and casinos.”

The financial settlement with the AG’s office will be in addition to a $2.8m penalty imposed by FinCEN as part of its own settlement. Here, the casino admitted to willful violations of the Bank Secrecy Act.

Breaches cited by FinCEN included a failure to implement and maintain an anti-money laundering program, as well as failing to report certain transactions involving currency in amounts greater than $10,000, failing to report suspicious activity, and failing to keep appropriate records.

Hawaiian Gardens admitted its violations covered a period from September 1, 2009, to July 15, 2016 – a period of nearly seven years.

The settlement marks the latest action step by the Attorney General to clamp down on legal gambling breaches in California. Last month, special agents from the BGC arrested two individuals for alleged involvement in an embezzlement scheme that resulted in the theft of more than $200,000 from the Red Hawk Tribal Casino.

Image: Gage Skidmore