Crown Resorts money laundering problem ‘greater than previously thought’

Crown Resorts’ efforts to reform itself may not be enough to prevent it from being declared unsuitable to run its Melbourne casino.

Ms O’Sullivan said the company has most likely not stamped out money laundering. Picture: NCA NewsWire/David Crosling

Crown Resorts’ first steps to reform its anti-money laundering processes are a “knee jerk reaction” to the explosive revelations of the NSW Bergin inquiry and raise questions about the company’s present suitability to operate its Melbourne casino, a royal commission has heard.

Counsel assisting the commission declared on Monday Crown’s money laundering issues are “likely greater than previously thought”, casting doubt on the James Packer-backed group’s reforms to crush financial crime across its casinos.

It is the strongest indication so far that Victoria could follow NSW in barring Crown from running a casino until regulators are satisfied it is a changed company.

“A relevant question will be whether Crown can be found suitable while such reforms are pending,” counsel assisting Meg O’Sullivan said.

Adding further doubt to Crown’s suitability to hold Victoria’s sole casino licence, Ms O’Sullivan suggested the company may have misled the Bergin inquiry about the depth of an external review of company bank accounts.

Addressing Commissioner Raymond Finkelstein on the start of the probe’s second week of public hearings, Ms O’Sullivan said she would closely scrutinise Crown’s reform efforts, which were kicked off after the NSW Bergin Inquiry revealed the company facilitated money laundering through company bank accounts used by customers to credit their gaming accounts with the casino.

“Changes to Crown’s policies concerning the ability of third parties and money remittance to deposit funds into Crown’s bank accounts have been assessed by an external expert,” she said.

“We will look closely at that assessment, and we will do that because if those changes are illustrative of the change program, which Crown is planning, there are serious concerns about Crown‘s ability to implement consistent, effective and sustainable reforms to address the past money laundering failures.

“So it’s open to conclude that Crown’s first steps on its reform pathway are simply a knee-jerk reaction to the revelations of the Bergin inquiry.”

Commissioner Raymond Finkelstein, left, at Victoria's royal commission into Crown Casino, in Melbourne. Picture: AAP

The accounts in question were linked to two Crown subsidiaries – Southbank and Riverbank Investments – in 2019, even though ANZ had previously expressed concerns to Crown over their vulnerability to criminal infiltration.

But Ms O’Sullivan said the company has most likely not stamped out money laundering through these efforts, with a preliminary report by Deloitte indicating that 14 other Crown bank accounts contain evidence of money laundering activity as recently as February of this year.

She also said the report will not be finished before the commission is due to report in August, part of a pattern of Crown limiting the size and scope of external reviews it commissions on itself.

“The evidence you will hear in the coming days reveals a pattern of behaviour,” she said.

“The pattern is Crown instructing external companies with limited terms of reference and limited retainer.”

The commission heard that a review of the Southbank and Riverbank accounts was recommended by Crown’s external money laundering Adviser Initialism in August 2019, but it was not launched until over a year later when the accounts became a major focus of the Bergin Inquiry.

Grant Thornton was then engaged to look for instances of “structuring” in the accounts, where customers make multiple deposits under $10,000 to avoid Crown having to report the transaction to financial crimes regulator AUSTRAC in line with anti-money laundering laws.

Initialism identified nine possible structuring scenarios Grant Thornton could investigate but Crown limited the scope to three scenarios and ruled out investigating foreign money accounts.

Grant Thornton subsequently identified that between 2013 and 2016, 19 per cent of Riverbank deposits resembled structuring, as did 1.31 per cent of Southbank deposits, totalling $5.3m in suspect transactions.

Giving evidence on Monday, Grant Thornton partner and AML expert Katherine Shamai said the amount of suspicious transactions could be higher.

A subsequent planned review of Crown Melbourne and Crown Perth’s main accounts were subject to the same limitations, Ms Shamai said, but Crown took Grant Thornton off the job in February of this year – despite already ensuring the Victorian gaming regulator at the end of 2020 the accounts were being examined.

“We were advised by Allens to stop work because they were engaging another party to conduct that analysis,” she said.

Ms Shamai also agreed with Ms O’Sullivan’s proposition that the Bergin Inquiry may have been “misled” through Crown’s insistence that Grant Thornton would examine a “full set” of structuring scenarios.

“I think there’s more that could be done for it to be a full set of analysis,” Ms Shamai said.

Ms O’Sullivan also requested Crown to clarify its intentions about an agreement it has with the NSW Independent Liquor and Gaming Authority to transition to cashless gaming in all its casinos, noting in a statement Crown Resorts referred only to “Crown Sydney” being part of the transition.

The commission continues on Tuesday.