Crown Resorts is bracing to pay one of the biggest financial penalties in Australian corporate history after lodging a joint submission with the financial regulator to the Federal Court.
Crown and financial crimes watchdog AUSTRAC have filed joint submissions with the Federal Court to propose a $450 million penalty over the group’s anti-money laundering and counter-terrorism failings at Crown Perth and Crown Melbourne.
Crown Resorts has agreed to pay $450 million for its anti-money laundering and counter-terrorism failings. Credit: Joe Armao
Crown Resorts chief executive Ciaran Carruthers said the group’s past failings were unacceptable and apologised on behalf of its new owners and leadership.
“Today marks a significant step in the process, and we are pleased to have reached this agreement with AUSTRAC, noting that it is still subject to consideration and approval by the Federal Court, and we await that decision,” Carruthers said.
“The company that committed these unacceptable, historic breaches is far removed from the company that exists today. The Crown of today is committed to harm minimisation and becoming the world leader in the delivery of safe gambling and entertainment.”
The company said it was now focused on its “Future Crown” reform program.
“We take seriously the responsibility we have to the community, to law enforcement, to our industry and stakeholders to ensure that we continue to comply with our anti-money laundering and counter-terrorism financing obligations,” Carruthers said.
The penalty, if approved, will be the third biggest in the nation’s corporate history, and is about 5 per cent of Crown’s last listed market capitalisation before it was taken private by Blackstone Capital for $8.9 billion in May last year.
Westpac was fined $1.3 billion in 2020 over its breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act, and the Commonwealth Bank of Australia was fined $700 million in 2018, but the percentage of their fines pales in comparison to Crown’s when accounting for relative market capitalisation.
Rival Star Entertainment Group also awaits a potential AUSTRAC penalty over similar failings. The Star recently announced hundreds of job cuts following unprecedented low earnings across its casinos in Queensland and Sydney.
The $450 million fine Crown has agreed to pay, if approved by the court, is equal to Star Sydney’s cost base. Star Entertainment has set aside a provision of $150 million to account for a potential AUSTRAC penalty, which is about 10 per cent of its market capitalisation.
Star Entertainment’s shares closed 85¢ higher at $1.18 on Tuesday following the announcement.
AUSTRAC chief executive Nicole Rose said the casino sector was at risk of exploitation by organised criminals who seek to launder their dirty money.
“Crown’s contraventions of the AML/CTF Act [Anti-Money Laundering and Counter-Terrorism Financing Act] meant that a range of obviously high-risk practises, behaviours and customer relationships were allowed to continue unchecked for many years,” Rose said.
“Crown has sought to respond to the failures identified in these proceedings by enhancing its approach to money laundering/terrorism financing risk management and investing in its financial crime compliance.”
AUSTRAC was continuing to work closely with Crown to ensure it was “fit for purpose into the future”, she said.
AUSTRAC declined to comment further, noting the matter was before the court. A hearing has been set for July 10-11 when Justice Michael Lee will consider the proposed settlement.
Crown lodged a net loss of $945.4 million for fiscal year 2022 with ASIC in November. The casino operator’s expenses grew from $1.98 billion in 2021 to more than $3.09 billion in 2022. Regulatory costs, coming in at $617.2 million, were the biggest weight on Crown’s books. These costs accounted for the AUSTRAC penalty.
Crown was in November handed a record-breaking $120 million penalty by the Victorian Gambling and Casino Control Commission for failing to encourage responsible gaming at its Melbourne casino, bringing its penalties in that state to $200 million.
In 2019, an investigation by this masthead and 60 Minutes revealed Crown had been infiltrated by international criminal syndicates and money launderers. Since then, government inquiries in the three states where its casinos operate have ruled it unfit to hold a casino licence, preventing it from opening the high-rise casino at its newest $2.2 billion tower at Sydney’s Barangaroo in late 2020.
Crown was forced to overhaul its board, management and procedures to satisfy the regulators, who approved a conditional licence for Crown to operate its Barangaroo casino in June. The conditional licence is valid until December 31, 2023.
Since then, the group said it had invested heavily in anti-money laundering and counterterrorism resources and more than doubled its responsible gaming team.
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