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Marina Bay Sands casino probed over money laundering controls

US Justice Department subpoenas former MBS compliance head to produce records related to any such violations

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MBS also faces an ongoing probe in Singapore by the Casino Regulatory Authority (CRA) into its money transfer policies.

Singapore

THE Marina Bay Sands (MBS) casino - owned by American billionaire Sheldon Adelson's Las Vegas Sands (LVS) - is being probed by the US Department of Justice over whether anti-money laundering regulations were breached in the way it handled the accounts of top gamblers.

The Justice Department in January issued a grand jury subpoena to a former compliance chief of MBS, seeking an interview or documents on "money laundering facilitation" and any abuse of internal financial controls, according to a copy of the subpoena seen by Bloomberg News.

Prosecutors asked the former compliance head, as a person with knowledge of the casino's operations, to produce records related to any such violations including through gambling junkets and third-party lending using casino credit, the document shows.

The US inquiry, which people familiar with the matter said is likely in its early stages, is also seeking to establish if there was any retaliation against whistleblowers, said the subpoena.

LVS Sands fell as much as 5.3 per cent on Bloomberg's report before closing up 1.1 per cent in New York.

Other operators, including MGM Resorts International and Wynn Resorts, erased declines and closed higher on a day that the Las Vegas Strip saw its casinos open for the first time since March due to the novel coronavirus pandemic.

MBS is one of the most profitable casinos in the world, accounting for more than a fifth of revenue and about a third of operating income at the US parent.

LVS's Asian operations, which also include Macau, contributed about 85 per cent of the company's US$13.7 billion in revenue last year, and have helped make Mr Adelson one of the richest men in the United States.

A spokesperson for the US Attorney's Office in Las Vegas said she could not confirm or deny ongoing investigations.

The subpoena also requested information on another former casino employee who carried out fund transfers to high rollers, said people with whom the employee is familiar.

In a written response, MBS said any suggestion of inappropriate activity is taken seriously, and it has investigated every assertion of wrongdoing brought to its attention.

MBS and its parent company have not received any requests from the Department of Justice, according to people familiar with the matter.

Other probes

LVS has drawn other Justice Department scrutiny in recent years.

In 2013, the company paid US$47.4 million to end a federal investigation into its acknowledged failure to report suspicious deposits by a high-stakes gambler in Las Vegas.

In 2017, it paid US$6.96 million to resolve a probe into alleged violations of US law in connection with bribes paid to government officials in China and Macau.

LVS admitted it knowingly and willingly failed to ensure the legitimacy of about US$5.8 million in payments to a business consultant.

MBS also faces a probe in Singapore by the Casino Regulatory Authority (CRA) into its money transfer policies.

A CRA spokesperson declined to comment further as the investigation is ongoing, adding it has not received a request from the US Department of Justice in connection with MBS.

In its response to Bloomberg, the regulator also said it is "committed to ensuring that the casinos in Singapore, including Marina Bay Sands, remain free from criminal influence or exploitation, and takes a serious view of any allegations of unauthorised money transfers".

Claims about these transfers surfaced in a lawsuit filed last year by Wang Xi, who sued Marina Bay Sands seeking to recover S$9.1 million that he said was sent to other casino patrons in 2015 without his approval.

The Singapore Police Force is also investigating Mr Wang's complaint, Bloomberg News reported last month. The casino has declined to comment on the suit.

CRA asked MBS to review its third-party transfer process, one of the sources said. Such transfers - when authorised - are legal, and used by groups of gamblers to share winnings and losses at different foreign casinos.

These transfers are sometimes made through so-called junket operators, which provide transportation, hotels and credit to high rollers.

In Macau, these operators allow Chinese gamblers to get around strict capital controls by pledging assets on the mainland in exchange for credit at casinos. The junkets are more strictly controlled in Singapore.

MBS's internal probe found instances of its group employees violating accepted transfer procedures by filling in payment details on pre-signed or photocopied authorisation forms, said a person familiar with the matter. It also uncovered cases in which original documents were destroyed, the source added.

Such practices appear to have stopped since April 2018, when the casino - which has had at least six chief compliance officers in the last decade - amended its procedures.

"When allegations related to the mishandling of letters of authorisation were made, the company thoroughly reviewed the matter," a MBS spokesperson said in the statement. "The review concluded that no patron funds were transferred in a manner that was contrary to a patron's intent."

The company has shared this information with the authorities in Singapore and will cooperate with any governmental requests it may receive, said the statement.

Singapore requires casinos to implement internal controls and check the authorisation of fund transfers, as well as comply with requirements to prevent money laundering and terrorism financing, CRA said in its response to Bloomberg.

A global anti-money laundering watchdog last year urged Singapore to tighten its controls. The Financial Action Task Force reported in November 2019 that Singapore has inadequate customer due diligence requirements for entities such as casinos and real estate agents.

It noted "moderate shortcomings are still affecting" the two sectors, without citing any companies.

The casino regulator did not reply to a request for comment on the watchdog report.

MBS is one of two firms granted licences to operate casinos in Singapore. Last year, the Singapore government agreed to extend the licences held by Genting Singapore and LVS to 2030, in exchange for pledges to invest a combined S$9 billion in expansion projects.

With a profit margin ranging from 53 per cent to 56 per cent in the three years ending in 2019, MBS is among the most profitable integrated gaming resorts in the world, said Bloomberg Intelligence analyst Brian Egger.

Since opening in 2010, the casino has became an iconic tourist attraction and was featured in the 2018 film Crazy Rich Asians.

In addition to the 160,000 square-foot casino, the complex has three 55-storey hotel towers topped with a boat-shaped sky deck and pool, as well as a shopping mall and convention centre.

Like many casinos around the world, MBS is closed due to the pandemic, slashing revenue for firms like LVS.

Macau gaming revenue across all casinos plunged 93 per cent in May from the year earlier, as operators await the opening of borders to spark a recovery after an unprecedented shutdown. BLOOMBERG

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