Crown Resorts still doesn’t have suitable anti-money laundering controls in place, having allegedly pocketed $1 billion in revenue from “high-risk” VIP customers - including some with known links to criminals and foreign governments - without checking the source of their money since 2016.
The financial crimes regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), on Tuesday launched civil action in the Federal Court against the James Packer-backed casino giant seeking penalties for “serious and systemic non-compliance” with anti-money-laundering laws.
AUSTRAC has taken Crown to the federal court over its money laundering failures. Credit: Joe Armao
Crown’s infiltration by international criminal syndicates and money launderers was revealed in a series of reports by The Age and The Sydney Morning Herald in 2019, and subsequently confirmed by damning public inquiries in NSW, Victoria and Western Australia.
AUSTRAC chief executive Nicole Rose said the watchdog’s investigation, launched in October 2020, found that Crown Melbourne and Crown Perth had failed to operate a compliant anti-money-laundering program and failed to conduct appropriate due diligence on “some very high-risk customers”.
Ms Rose said that while Crown had taken stops towards improving its controls, “there is further work to do” and AUSTRAC was working with Crown “to address ongoing compliance concerns”.
AUSTRAC’s court statement includes new allegations about the extent of suspicious and potentially criminal activity at Crown. It alleges Crown failed to conduct proper due diligence on 60 “high-risk” VIP customers, who bet more than $70 billion in its high-roller rooms and lost about $1.1 billion to the casino since March 2016.
Crown allegedly knew some of those customers had been arrested or charged with dealing with the proceeds of crime and money laundering, while many engaged in suspicious activities such as carrying large amounts of cash into the casino in plastic bags or shoeboxes.
There were 75 “suspicious incidents” in which cash totalling $23.5 million was found in a Crown Melbourne private gaming room used by a high-roller “junket” tour operator. “The identity of some of the persons presenting and removing the cash from the casino premises was and remains unknown,” the AUSTRAC statement said.
Meanwhile, more than $300 million worth of transactions from Crown patron accounts allegedly bearing the hallmarks of money-laundering techniques had also been identified by the watchdog.
AUSTRAC has not said what Crown’s potential fine could be. The highest penalties secured by the watchdog have been against Westpac ($1.3 billion in 2020), Commonwealth Bank ($700 million in 2018) and Tabcorp ($45 million in 2017). Credit Suisse analysts have previously estimated Crown’s fine would be about $250 million.
The ASX-listed outfit is in the midst of a takeover by the US private equity firm Blackstone, but an AUSTRAC fine of $750 million or more could see that renegotiated under a “material adverse change” clause in their deal signed two weeks ago.
AUSTRAC said that during its breaches, Crown was “operating a highly profitable business” and by breaking the law had avoided spending funds on IT, staff and other tools to stop money laundering.
Crown, which has replaced its entire board and senior management since allegations of its criminal infiltration arose, said substantial changes were under way at the company that positioned it to be an industry leader in “its approach to governance, compliance, responsible gaming and the management of financial crime risk”.
AUSTRAC on Tuesday added it was continuing its investigation into The Star Entertainment Group’s casinos in Sydney and Queensland, and SkyCity Adelaide.
The court action also comes as the NSW Independent Liquor and Gaming Authority (ILGA) prepares to give Crown “conditional” approval to finally open the casino at its new property at Sydney’s Barangaroo, which had its gaming licence suspended in late 2020 following explosive revelations at the Bergin Inquiry.
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