Crown says its money laundering program was compliant, despite admitting to hundreds of breaches

The casino group, formerly backed by James Packer, has released its legal response to the lawsuit Austrac launched last March.

Crown has made a litany of admissions to historical money laundering offences at the group. (Photo by Darrian Traynor/Getty Images)

Crown Resorts maintains its anti-money laundering and counter terrorism financing program was compliant despite admitting to a litany of breaches during a six-year period.

The formerly James Packer-backed company — which US private equity titan Blackstone took over for $8.9bn last year — has officially responded to a lawsuit from the financial crimes regulator.

Austrac launched legal action against the group last year, alleging it breached anti-money laundering and counter-terrorism financing laws more than 500 times. In a statement of claim totalling 863 pages, the regulator made damning allegations, including that Crown dealt with patrons involved in sex slavery – one as late as November 2021, a month after Victoria’s royal commission found the company no longer suitable to hold a licence for its flagship Melbourne casino.

Austrac also alleged Crown let its high-roller customers carry “large amounts of cash” on its private jets across the world with “no controls” over the handling of the money, and turned over more than $8bn in what was known as the “Chinatown junket” despite management being aware of the risks of money laundering.

Each breach attracts a fine of up to $22.2m.

Crown released a concise statement in response to the allegations on Friday afternoon, making a raft of admissions. It said the points in dispute were “certain issues of legal construction regarding the alleged historical contraventions”.

In particular, the company denied that Part A of its anti-money laundering, counter-terrorism financing (AML/CTF) program was not compliant.

“The primary purpose of the Part A program, determined as a matter of objective fact, is to identify, manage and mitigate AML/TF risks reasonably faced by providing designated services even if, in effect, the Part A Program does not, in various respects, achieve this purpose,” the company said in court documents.

“The Part A programs adopted and maintained by the respondents between March 1, 2016 and March 1, 2022 had the sole – and, therefore, the primary – purpose of identifying, mitigating and managing the ML/TF risks reasonably faced by providing designated Services.”

Crown said it also did not provide services “falling within the definition of a loan” during the six years to March 1, 2022 and that its board and senior management were not able to “exercise ongoing oversight” of its AML/CTF risks, given the alleged absence of an appropriate framework.

“The rules does not impose any specific content requirements for a Part A program of the nature alleged,” Crown said.

“A more natural reading of … (the rules) would require an inquiry into the level of board and senior management oversight that in fact occurred in relation to a Part A program, and whether this oversight met the requisite standard for oversight.”

Crown released its response a week after Federal Court judge Michael Lee questioned the seriousness of Austrac’s pursuit of Australia’s biggest casinos, slamming it for taking longer than the carve up of Europe after the Napoleonic Wars. The regulator is also suing Star Entertainment and Sky City.

“The Congress of Vienna took nine months to talk about the future of Europe, you’ve had 12 months to talk about admissions,” Justice Lee told Austrac’s lawyers, referring to the series of diplomatic meetings to redraw Europe following Napoleon Bonaparte’s defeat in 1815.

“I’m not going to give any more time for there to be chitchat between solicitors. We’re going to get the matter on.”

Justice Lee was particularly critical of Austrac for giving Crown until May to submit its defence. The cases against the casinos have been bogged down with negotiations of agreed facts and admissions.

“I just find it astounding. Why on earth would a regulator agree to a timetable like that?” Justice Lee said.

Austrac’s lawyer Michael Hodge said the regulator was “very serious about running this case”.

“As for the time that’s required … the solicitors who are acting for Crown are extremely experienced in relation to AML, CTF (anti-money laundering, counter-terrorism financing) matters,” Mr Hodge said.

“When they say they will need to have 12 weeks to do the defence … we’re just not in a position as officers of the court on behalf of Austrac to say that’s wrong. That’s the difficulty.”