Crown Resorts turned blind eye to sex slavery, human trafficking: Austrac

Crown Resorts repeatedly ignored red flags on a man known as ‘customer 26’, a brothel owner linked to sex slavery and human trafficking.

Crown Resorts is facing a blockbuster fine from Austrac over facilitating money laundering and other organised crime. Picture: AFP

As early as 2012, law enforcement raised concerns with Crown Resorts over a high-roller known as “customer 26” and his links to sex slavery and human trafficking.

But if surveillance teams at the James Packer-controlled group had any worries about this patron, they kept them to themselves.

Customer 26 – a brothel owner – is one of 60 former Crown clients in which the gaming giant’s apparent lack of interest and action has brought it unstuck.

Over 863 pages, in a civil claim launched against Crown, the financial crimes watchdog has laid out allegations of a more sinister side to the group on top of the NSW Bergin inquiry’s explosive revelations.

Customer 26 is mentioned 200 times in Austrac’s statement of claim against the company, which also alleges that Crown allowed criminals to carry “large amounts of cash” on its private jets across the world with “no controls” over the handling of the money.

Customer 26 began gambling at Crown Melbourne soon after it opened in 1996, and over the next 23 years turned over hundreds of millions of dollars at the casino.

He was a registered representative at Crown Melbourne and Crown Perth for at least three junkets, including Macau’s Meg-Star – a program in which the casino group paid him a commission to lure other high-rollers.

This was despite Crown Melbourne in 2007 assessing this customer as “moderate or significant risk”. Five years later, in 2012, when law enforcement agencies asked Crown to provide records about the customer in relation to the Sex Work Act and other organised crime, Crown took no action.

A spotlight was cast on the patron again in 2014 when the brothel regulator – Consumer Affairs in Victoria – began tribunal proceeding against customer 26, alleging human trafficking. And Crown again continued to provide him “high value financial and gaming services”.

“Crown Melbourne became aware that customer 26 was a person of interest to a law enforcement agency in connection with allegations of human trafficking, the operation of illegal brothels and the use of Crown Melbourne for the purpose of money laundering,” Austrac said in its statement of claim.

“Crown Melbourne failed to make appropriate enquiries as to customer 26’s source of funds/wealth. It was not until July 2019 that Crown Melbourne became aware that Customer 26 owned a brothel.”

This was despite open source court records from 2015 reporting that the brothel had links to organised crime and serious criminal activity. Austrac said this included money laundering, and “the recruiting of women from a foreign region to work in the brothel for the material benefit of managers and staff”.

“There were real risks that customer 26’s source of wealth and source of funds were not legitimate. At no time did Crown Melbourne or Crown Perth appropriately monitor customer 26’s transactions on a risk-basis.”

Court records from 2015 also named customer 26 in fraud prosecution over him giving “$100,000 in Crown gaming chips on the basis that person would transfer $100,000 to a third party”.

Despite law enforcement and regulator enquiries, Crown Perth “first assessed customer 26’s risk on May 29, 2019, and rated him as low risk”.

That same year, Crown Melbourne recorded customer 26’s individual rated gaming activity as a cumulative turnover exceeding $332.44m, while at Crown Perth it was more than $3.2m.

It was not until August 2019 that Crown Melbourne’s legal team recommended customer 26 be banned, given he owned a “brothel where money laundering occurred”.

“The recommendation was supported by all senior management with the exception of one who opposed the recommendation on a number of grounds, including that were a great number of customers who committee members may have heard allegations in respect of, which might in fact be true, but that cannot be substantiated”.

The allegations are part of a 17-month Austrac investigation, which found Crown breached anti-money laundering and counter-terrorism financing laws more than 500 times, which each contravention attracting a fine of up to $22.2m.

That strategy could now derail Crown’s $8.9bn takeover by US private equity behemoth Blackstone, which has an exit clause if Austrac fines the company at least $750m. And the regulator has recent form with blockbuster penalties, fining Westpac and Commonwealth Bank $700m and $1.3bn respectively.

On Tuesday Crown said it has “developed a comprehensive remediation plan which is intended to position Crown as a leader in the industry in its approach to governance, compliance, responsible gaming and the management of financial crime risk”.

“The plan is underpinned by an uplifted organisational culture. Crown recognises the importance of complying with its financial crime obligations and has overhauled its approach to managing financial crime risk.”

It also banned junkets in 2020.

Crown shares firmed 0.1 per cent to $12.38 on Wednesday. This compares with Blackstone’s offer price of $13.10 a share.

Originally published as Crown Resorts turned blind eye to sex slavery, human trafficking: Austrac