Crown’s reviewed risk systems before crime claims emerged

Crown Resorts completed a review more than a month before allegations surfaced about its links with organised crime.

In the past four years the regulator has fined Crown $150,000 for failing to accurately record details of a junket. Picture: AFP

Crown Resorts completed a review of its internal risk systems and anti-money-laundering controls following recommendations from the Victorian gaming regulator more than a month before allegations surfaced about its links with organised crime.

The Victorian Commission for Gambling and Liquor Regulation recommended last year that Crown undertake a robust review — with input from financial intelligence agency Austrac — to ensure anti-money-laundering risks at its Melbourne property were “appropriately addressed”.

The VCGLR also recommended Crown reassess its risk systems and review its internal controls to ensure its compliance department knew about projects that might need regulatory approval.

The recommendations flowed from its five-year review of Crown Melbourne’s casino licence.

Crown now says it implemented the two critical recommendations by the July 1 deadline set by the regulator, before the publication on July 27 of claims that its flagship Melbourne property had links to high rollers involved in money laundering and organised crime.

The VCGLR made 20 recommendations in its review and Crown executive chairman John Alexander said 13 had been actioned by Crown, including the two relating to internal controls and anti-money-laundering.

“When the VCGLR brought down its recommendations, some were already put in place by Crown or were being put in place by Crown,’’ Mr Alexander said.

On the outstanding 7, he said Crown was “on track to meet all the time frames agreed with the VCGLR to respond to the recommendations”. They are all believed to relate to responsible gaming.

He also added that “many of the issues raised in the media were considered in that review, which found that Crown remained a suitable company to hold a casino licence.”

NSW’s Independent Liquor and Gaming Authority is currently conducting a public inquiry into Crown, while the VCGLR has also announced it will re-examine issues relating to Crown Melbourne that have been reported in the media over the past month following a request by Victorian Gaming Minister Marlene Kairouz.

“If the inquiries identify any opportunity to improve our processes, we will welcome those recommendations as we have done in the past,” Mr Alexander said.

ILGA in NSW is also reviewing the sale in May by Crown’s biggest shareholder, billionaire James Packer, of a 19.9 per cent stake in the company to Lawrence Ho’s Melco Entertainment.

ILGA is examining Melco’s links to Mr Ho’s father, the Macau casino billionaire Stanley Ho, who has long faced allegations of links to organised crime.

Crown’s licence for its $2 billion Sydney casino, granted in 2014, forbids it from dealing with a list of companies and individuals associated with Stanley Ho.

Crown’s review of its anti-money-laundering compliance and internal controls earlier this year was in addition to work done since December last year by Initialism, an Australian company specialising in anti-money-laundering and counter-terrorism financing.

Mr Alexander revealed last week that the firm Initialism had been working with Crown to review its transaction monitoring program.

Initialism has been authorised by anti-money-laundering regulator Austrac as an external auditor and worked with the regulator during its investigation of Commonwealth Bank.

Its managing director Neil Jeans is also working with Austrac in relation to issues involving buy-now, pay-later sharemarket darling Afterpay.

Mr Jeans reported to the risk committee of the Crown board several weeks ago before presenting his findings to the full Crown board, ahead of the company’s annual results last week.

Mr Alexander claimed that the firm Initialism had told the Crown directors that the gaming company was a “gold star customer”.

Austrac chief executive Nicole Rose said last week that Crown and rival The Star Entertainment Group were “very good at complying with what we require them to comply with”.

But she said the financial intelligence agency was examining potential “gaps” in regulations that dictate what casinos must know about their gaming clients, as part of a probe into the risks of casino ‘‘junkets’’.

She said Austrac was working alongside the Australian Criminal Intelligence Commission, which is investigating organised crime in casinos following revelations involving Crown.

In 2016-17, Austrac undertook an industry-wide casino junkets campaign to develop more detailed understanding of how junkets work in Australia.

As a result of that campaign it recommended enhancements to Crown Melbourne’s anti-money-laundering program in relation to reporting allegations and staff awareness training. Crown has implemented some changes and remains in dialogue with Austrac about addressing the other matters raised by the regulator.

The VCGLR separately observed in its five-year review last year that “to assist in mitigating the risks associated with junkets, the current internal control statements for junkets at Crown Melbourne could be strengthened with the inclusion of more robust controls in relation to the identification of individual junket players and their associated gaming transactions when participating in junkets.”

In the past four years the regulator has fined Crown $150,000 for failing to accurately record details of a junket as required by its own internal controls, and on another occasion ordered Crown to cease its dealings with an unspecified junket operator.

Crown signalled last week it may reduce its reliance on junket operators, which have been at the centre of allegations against the company, and resume more direct links to high rollers.

Crown shut down its direct marketing operations in China in the wake of the arrest of its staff there in October 2016.

John Alexander said last week that the VCGLR was yet to finalise a separate investigation into the arrests.