February 3, 2015 / 4:39 PM / 3 years ago

Exclusive: Amid U.S. probes, Caesars poaches top money laundering expert

(Reuters) - Caesars Entertainment Corp CZR.O, under investigation by the U.S. Treasury and a federal grand jury over alleged failures to comply with anti-money laundering law, has hired away Wal-Mart Stores Inc’s WMT.N top expert.

Caesars Palace casino in Las Vegas, Nevada, is seen in a file picture taken July 14, 2004. REUTERS/Ethan Miller/Files

Caesars, whose operations include the Caesars Palace and Flamingo casino hotels on the Las Vegas Strip, hired Benjamin Floyd for a senior vice president position dedicated to anti-money laundering, or AML, compliance, a casino spokesman confirmed. Floyd started his new job last month.

“Ben will be dedicated solely to focusing on our AML efforts going forward,” Caesars spokesman Gary Thompson said in a statement to Reuters. “We are very confident (his) AML experience with Wal-Mart qualifies him for his new role with us.”

Floyd, an experienced compliance specialist with a Harvard degree, did not respond to an online request for comment.

The Las Vegas-based company’s decision to hire a high-profile, outside anti-money laundering expert, instead of promoting from within, was “outside the norm” for a casino company, said a gaming industry insider who asked not to be named because he consults for Las Vegas casinos. It appeared aimed at demonstrating a push to instill a “culture of compliance,” something regulators of late have said is important, the source said.

The source said the move also appeared aimed at mitigating any possible civil or criminal penalties that could emerge as a result of the Treasury and grand jury probes, the source said.

Poaching top anti-money laundering talent, both from other businesses and from the government, has become commonplace. The federal government has cracked down on financial institutions that fail to meet their obligations to police transactions for financial crime and sanctions violations. With penalties running into the billions of dollars, banks have led what has increasingly become a bidding war for top experts, with some hires demanding salaries in excess of $1 million.

The new job at Caesars has landed Floyd at the center of a regulatory storm.

The casino industry’s compliance with the Bank Secrecy Act, the primary U.S. anti-money laundering law, has come under scrutiny from the government in recent years. Authorities believe criminals around the world are using American casinos to launder their ill-gotten gains and move them into the U.S. financial system.

Authorities also believe the casino industry has done a poor job of complying with the banking law, which requires, among other things, that financial services businesses report suspicious transactions or those involving large sums of cash.

An enforcement push began in August 2013 when Las Vegas Sands Corp LVS.N agreed to pay $47 million to settle with the Justice Department over anti-money laundering failures.

Two months later, Caesars disclosed that the Treasury Department’s Financial Crimes Enforcement Network was investigating a subsidiary, Desert Palace Inc, over alleged lapses. Caesars also said a federal grand jury was investigating the matter.

The status of those probes is not known. A spokesman for the financial crimes unit declined to comment.

In-house lawyers Susan Carletta and Tim Donovan, who is Caesars’ general counsel and chief regulatory and compliance officer, last year led an effort to improve the company’s anti-money laundering efforts, company spokesman Thompson said.

He added that Caesars relied on specialist outside counsel for help in drafting and implementing new measures and for “day-to-day guidance on AML matters.”

At Wal-Mart, Floyd oversaw the retailing giant’s U.S. anti-money laundering and financial services compliance programs, according to a 2010 conference speaker biography. In 2013, he was made global anti-money laundering leader.

Asked for comment on Floyd’s move, Wal-Mart spokesman Randy Hargrove said the company “would wish (Floyd) well in his new role.”

Before joining Wal-Mart in 2007, Floyd spent a decade in compliance and risk-management positions at T. Rowe Price. He was responsible for establishing and managing anti-money laundering programs for the company’s banking, broker-dealer and mutual fund businesses.

Editing by Jonathan Oatis

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