Austrac reveals its own monumental failure over casinos

Every failure Austrac has ‘identified’ in Star is an even more damning failure by the financial crimes regulator.

If you want to identify regulatory incompetence on a truly stunning – indeed, mammoth - scale, take a look at AUSTRAC.

It is 28 years since Crown casino kicked off in Melbourne, 27 years since Star did in Sydney; and it is only this year that AUSTRAC has launched proceedings against either. Crown earlier this year, Star this week.

Now, it is entirely possible that for most of those quarter-centuries, the operations of both casino groups were as pure as the driven snow or as morally impeccable as the Vatican Bank. Hmm, on second thoughts, scrap that second comparison.

But, you know what I mean: why would a regulator, charged like AUSTRAC with trying to prevent money laundering, along with the odd bit of potential terrorism financing, have the slightest concern with a casino?

Sure, they turn over – quite literally – billions of dollars of cash each year. Indeed every day of the week, including Sundays, millions of dollars of crisp real actual cash money changes hands within their walls. But why would you think they might be places of high risk for money laundering? Surely, no more than collection plates in churches on those Sundays?

Just look at Casino Central, Las Vegas. In a near-100 years, there’s never been the slightest suggestion of money laundering there, of having the slightest connection with organised crime; maybe, the odd Bugsy Siegel aside. It had to be entirely reasonable that AUSTRAC didn’t bother with monitoring – far less, aggressive monitoring – of all those tens of billions of dollars flowing through the casino tills. That it was content for more than 20 years to, in effect, ‘take their words for it’; that there was no money laundering or even just risk of it; that all those high rollers, flying south in private jets from Asia, were utterly scrupulous in their cash handling and reporting.

AUSTRAC chief executive officer Nicole Rose. Picture: NCA NewsWire / Gary Ramage

Call me pedantic, even call me a grumpy old sceptic, but I would have thought that just now and then over those 20 years, it might have been a good idea to run snap on-the-ground audits; forensic ‘raids’, so to speak, on the casinos. Yet, it seems, AUSTRAC was quite content to snooze through the decades; relying – at best, or worst – on the individual state casino regulators to pick up anything dodgy.

And it is now only since the various Royal Commissions laid bare how they actually – mis – operated; how they actually facilitated dubious cash transactions; that AUSTRAC has woken from its slumbers. AUSTRAC’s statement – in a mirror copy of the one it released earlier this year with Crown – is a bizarre, totally unknowing recitation of its own utter incompetence. It accused Star – as it did Crown – of “alleged serious and systemic non-compliance with Australia’s anti-money laundering……laws”.

Gee, that word “systemic” sort of suggests – at least as AUSTRAC alleges – long-term and ingrained malpractice; the sort of thing that even the most ordinary regulator should have long ago nailed. Yet AUSTRAC “began” its compliance program in September 2019; its enforcement investigation only opened in June 2021. So, in the eyes of AUSTRAC, there was ‘nothing to see here’ between 1995 and 2019.

AUSTRAC CEO Nicole Rose said casinos “must take their anti-money laundering obligations seriously”.

Yes Nicole; but shouldn’t AUSTRAC have also taken its own “anti-money laundering regulatory obligations seriously”, as well? On and on the embarrassing AUSTRAC assertions went. Every failure ‘identified’ in Star was an even more damming self-own of AUSTRAC’s regulatory failure. Star’s failures exposed the Australian and global financial system to systemic ML/TF risk “over many years”. Yes Nicole; and AUSTRAC’S failure? Over “many years”, as well?

AUSTRAC is now “working” with Star to get the right systems in place.

Uh, would that be 25 or only 20 years late, Nicole?