SkyCity, NAB, Crown and Star targeted in Austrac crackdown

A probe into money laundering at SkyCity Adelaide has identified “potential serious non-compliance”, triggering calls for a Royal Commission.

Financial regulator Austrac has identified “potential serious non-compliance” by SkyCity Adelaide with anti-money laundering and counter-terror financing rules, its NZ-based parent company told investors on Monday.

The potential non-compliance includes concerns relating to ongoing customer due diligence and maintaining programs to enforce the rules, ASX-listed SkyCity Entertainment Group told investors, sending its shares south on Monday.

The concerns were identified in a compliance assessment by Austrac, which started in September 2019 focusing on the casino’s management of customers identified as “high risk and politically exposed persons” over the 2015-16 and 2018-19 financial years.

The matter had been referred to Austrac’s enforcement team, which had initiated a formal investigation.

Austrac had not made a decision on its regulatory response, said SkyCity.

SkyCity said it would fully co-operate with Austrac and said that it takes its anti-money laundering responsibilities very seriously.

SkyCity Adelaide general manager David Christian. Picture: Brenton Edwards

The developments may force the SA government’s hand on initiating an inquiry into the casino’s operations, similar to action undertaken by the NSW, Victorian and WA governments.

SA Treasurer Rob Lucas had previously said SA Liquor and Gambling Commissioner Dini Soulio had advised an independent inquiry into the operations of SkyCity Adelaide was not necessary.

“If any adverse information about the conduct of SkyCity Adelaide is brought to the Commissioner’s attention the requirement for an independent inquiry would be considered at that time,” Mr Lucas said in March.

A statement from the SA Attorney-General’s Department said Mr Soulio’s review of SkyCity’s operations, which started shortly after the release of the Bergin Report into NSW’s Crown Resorts’ casino operations earlier this year, was now on hold.

“The Commissioner will continue to collaborate with AUSTRAC, and monitor the Royal Commissions into the operations of casinos in other jurisdictions. Inspectors from Consumer and Business Services continue to undertake inspections of SkyCity’s operations,” the statement said.

Mr Lucas said he had nothing further to add.

SA-Best gambling spokeswoman Connie Bonaros called for a Royal Commission following the “disturbing revelations”.

“Every South Australian should be deeply concerned at the bombshell revelations by AUSTRAC – and nothing short of a Royal Commission will get to the bottom on those allegations,” Ms Bonaros said.

Casinos around the world are notorious for being used by crime gangs to launder “their dirty money”, SA-Best MLC Frank Pangallo said.

“The State Government is in complete denial if it doesn’t think illegal activity doesn’t take place at gambling establishments like SkyCity Adelaide,” Mr Pangallo said.

In March, their party called for an independent investigation into “any indications of criminal activity” at the SkyCity Adelaide casino.

A gaming floor at the Adelaide casino. Picture: Brenton Edwards

It followed revelations a Chinese high-roller was suing the casino and a junket operator with alleged Asian crime gang links over his missing millions.

On Monday Austrac said it would not comment further on the actions, which also involve NAB, Crown and Star Entertainment because investigations were continuing.

All four companies were named on Monday as being the subject of serious concerns by the financial crimes regulator about compliance with anti-money laundering and counter-terrorism financing laws.

Austrac chief executive Nicole Rose has put casinos, cryptocurrency exchanges and money transfer businesses on notice that they were high-risk sectors that criminals sought to exploit to launder the proceeds of crime.

Ms Rose said in a commentary article for The Australian that the domestic casino sector is “at risk of criminal misuse” due to the products and services they offer. “We have an enforcement investigation under way on Crown casino that demonstrates the seriousness of our concerns,” she says. “And we also have significant compliance work under way on the casino sector.”

NAB ‘working to improve’

NAB told the ASX on Monday it had been advised that it was Austrac’s view there was “potential serious and ongoing noncompliance” with customer identification procedures, customer due diligence and compliance with anti-money laundering programs.

NAB said Austrac had not made any decisions on enforcement action but that the regulator had said it was not considering civil penalty proceedings. This decision was “reflective of the work undertaken” by NAB to date.

NAB said it has disclosed the existence of anti-money-laundering compliance issues in various public disclosures since 2017.

NAB CEO Ross McEwan said NAB would continue to co-operate with Austrac in its investigations.

“NAB takes its financial crime obligations seriously. We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do,” Mr McEwan said.

Crown’s casino in Perth.

Crown Perth probe

Meanwhile the financial crimes regulator will commence a formal enforcement investigation into Crown Perth over potential “serious noncompliance” with anti-money laundering and counter terrorism financing rules.

In a statement to the ASX, Crown Resorts confirmed the investigation and said it would co-operate fully.

The enforced investigation is the second to be launched against Crown by Austrac, with the first commenced against Crown Melbourne in October of last year.

The most recent investigation comes as the Victorian royal commission into Crown Resorts has heard evidence about contemporary deficiencies in Crown’s AML regime, which is in the process of being reworked by Crown after the NSW Bergin Inquiry temporarily suspended the group from opening its Sydney Casino earlier this year.

Star Sydney under scrutiny

Star Entertainment also joined the series of companies revealing on Monday they were the subject of Austrac investigations into “potential serious non-compliance” with anti-money laundering and counter-terrorism financing laws.

Star, which operates casinos in Sydney, Brisbane and on the Gold Coast, said Austrac’s assessment had focused on Star Sydney’s management of customers identified as high-risk over periods between 2015 and 2019.

No decision had been made by Austrac on a regulatory response or enforcement action, Star said.

Crown said last October it had been told by Austrac that potential noncompliance with anti-money laundering and counter-terrorism financing laws had been identified at its Melbourne casino.

This related to ongoing customer due diligence, and adopting, maintaining and complying with an AML/CTF program.

“These concerns were identified in the course of a compliance assessment that commenced in September 2019 and focused on Crown Melbourne’s management of customers identified as high-risk and politically exposed persons,” the company said in a statement to the Australian Securities Exchange.

The matter had been referred to Austrac’s enforcement team, which had initiated a formal enforcement investigation.

Crown said it would respond to all information requests in support of the investigation and fully co-operate with Austrac.

Austrac’s biggest penalties so far have been extracted from the banking industry, including a record $1.3bn fine imposed on Westpac last September for millions of transgressions of the AML/CTF Act.

Commonwealth Bank paid a then-record fine of $700m for similar contraventions in 2018.

Ms Rose, however, says that banking is not the only high-risk sector.

The work undertaken on the casino industry, she says, has raised awareness of the impact of financial crime, and the need for mutual public and private sector efforts to combat it stands in stark contrast to film and television programs that have long glorified organised crime and money laundering, perpetuating the myth that it’s victimless crime.

“This is far from the reality,” the Austrac chief says.

“As regulation and law enforcement efforts are revealing the devastating real-life impacts financial crime has on everyday Australians, I am buoyed by this significant shift in thinking and behaviour.

“Removing profit from criminals and making it harder for them to exploit our financial system will have the greatest long-term impact on protecting our community from harm and it requires us all to do our part.”

Originally published as SkyCity, NAB, Crown and Star targeted in Austrac crackdown