‘Making the Commonwealth Crown’s banker’, judge blasts interest-free payment plan for Crown Resort’s $450m fine

A two-day hearing has begun in the Federal Court to approve a $450m fine slapped on Crown Resorts over countless historic money laundering breaches.

A Federal Court judge has questioned Crown Resorts’s contrition over countless historic breaches of anti-money laundering laws, while criticising a interest-free payment plan for a $450m fine.

Crown Resorts agreed with Austrac in late May to pay the penalty – making it the biggest fine slapped on a casino operator globally.

Austrac has proposed a payment plan, involving Crown paying just $125m upfront with no interest.

But Justice Michael Lee – who is presiding over a two-day hearing to approve the fine – lambasted the plan as “making the Commonwealth Crown’s banker”.

Justice Lee was hesitant to label the vast changes to Crown’s leadership and Crown’s board and leadership team – as well as the cessation of junkets – as being evidence of contrition.

“Contrition means more than saying sorry when you get caught. It means a state of mind in people who have done wrong to play with a straight bat in the future,” he said.

“It is not people who have done wrong being wept out, and there are new people there.”

Austrac’s lawyer Michael Hodge KC told the court it was impossible to determine the full extent of Crown’s breaches, citing improper monitoring impeded accurate documentation and record-keeping.

“Cash was brought into the room by unknown persons and exchanged by junket operators with other unknown persons. Cash was colourfully carried in paper bags, shoeboxes, and briefcases,” he said.

But Mr Hodge said the company – formerly backed by James Packer which US private equity firm Blackstone took over for $8.9bn last year – has largely replaced its leadership.

Crown Resorts chief executive Ciarán Carruthers has also repeatedly said that he is focused on ‘Future Crown’ and has apologised for the ‘unacceptable historical failings’.

Crown Resorts boss Ciaran Carruthers. Picture: David Caird

As part of the Austrac settlement, Crown admitted its casinos failed to appropriately assess the money laundering and terrorism financing risks they faced, and to identify and respond to changes in risk over time.

The company did not have appropriate controls and had failed to establish a framework for the board and management to have oversight of the anti-money laundering, counter-terrorism financing program.

Of particular focus during Monday’s proceedings was Crown’s junket programs, which allowed the casinos’ operators to facilitate gambling by unvetted high-wealth players in private gambling rooms.

The court heard that throughout the program, which ran between March 2016 to March 2020, that junkets including Macau-based SunCity ran rooms inside Crown, as well as their own cash desks.

From late-2017 to early-2018, the SunCity room received as many as 58 suspicious matter complaints, with police making a further three inquiries later that same year in regard to SunCity’s cash desk.

Police investigated claims two people had made cash deposits of about $700,000 and $1.5m, and that an employee had handed a third person hundreds of thousands of dollars in the casino’s parking lot.

Justice Lee called into question submissions by Mr Hodge that Crown had not deliberately failed in its obligations and had done so by negligence, despite profiting from impacted programs.

“If there wasn’t a deliberate intention to contravene the laws, then what was the reason?” Justice Lee asked.

“People just didn’t understand? What am I supposed to take as the reason?”

Mr Hodge said it had not been agreed upon why Crown had “so egregiously failed” to comply with the laws, only that they had not deliberately done so, with the leadership now largely replaced.

The court also heard that on top of its inadequate programs, Crown automatically rated players, including high-wealth spenders, as being of a low-risk of money laundering or criminal activities.

At least 60 high-risk customers were highlighted by Austrac, 43 of whom were junket operators – many classified as “politically influenced people”, whose combined turnover was $69bn.

At least 40 had been identified as being suspicious by either Crown Melbourne or Crown Perth, while $38 were involved in the transfer of large sums of money, totalling approximately $450m.

The company initially faced maximum fines of up to $22.2m per breach. Under the terms of the takeover, Blackstone had an exit clause if the penalty was more than $750m. That made it comfortable enough to proceed with the transaction.

The Australian had flagged in January the fine was likely to amount to “hundreds of millions of dollars” rather than eclipsing $1bn.

The company has also been hit with $250m in fines from the Victorian Gambling and Casino Control Commission over wrongdoing unearthed in the Victorian royal commission.