NAB, Crown, Star and SkyCity targeted in Austrac crackdown
National Australia Bank, Crown, Star and SkyCity have all been targeted by an Austrac crackdown on money-laundering.
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Financial crimes Austrac has launched an enforcement blitz against National Australia Bank, Crown Resorts, Star Entertainment and the Adelaide casino operator SkyCity Entertainment, referring “potential serious noncompliance” of anti-money laundering laws to its enforcement division.
The four cases involve multi-year investigations into possible breaches of various parts of the Anti-Money Laundering and Counter-Terrorism Financing Act.
They come after Austrac chief executive Nicole Rose warned casinos, cryptocurrency exchanges and money transfer businesses were on notice that they were high-risk sectors which criminals sought to exploit to launder the proceeds of crime.
Ms Rose said in a commentary article for The Australian that the domestic casino sector is “at risk of criminal misuse” due to the products and services they offer.
“We have an enforcement investigation under way on Crown casino that demonstrates the seriousness of our concerns,” she said.
“And we also have significant compliance work under way on the casino sector.”
In a letter to NAB dated last Friday, Austrac cited concerns about the bank’s customer identification procedures, ongoing customer due diligence and compliance with part A of NAB’s anti-money laundering and counter-terrorism financing program.
Part A requires entities to have processes and procedures in place to help them identify AML/CTF risks.
According to the letter, Austrac’s concerns arose from historical and contemporary compliance assessments.
“In particular, the seriousness of self-disclosed matters presented to Austrac over a prolonged period combined with the accompanying closure rates is concerning,” it said.
Despite this, no decision had been made on whether enforcement action would be taken, and Austrac was not considering civil penalty proceedings “at this stage”.
This was due to the work undertaken by NAB to correct its compliance issues, which were first disclosed publicly in 2017.
Since then, the bank has spent about $800m as part of a multi-year program to improve its financial crime and fraud controls, and now has 1200 people managing financial crime risks.
Austrac’s disclosure that it’s not currently considering civil penalty proceedings will come as a huge relief to NAB and the bank’s investors.
Last September, Westpac paid a record $1.3bn fine to settle millions of admitted transgressions of AML/CTF laws, with Commonwealth Bank paying a then-record $700m penalty for similar contraventions in 2018.
NAB chief executive Ross McEwan said the bank would continue to co-operate with Austrac in its investigations.
“NAB takes its financial crime obligations seriously,” Mr McEwan said.
“We are very aware that we need to further improve our performance in relation to these matters.
“We have been working to improve and clearly have more to do.”
Austrac acknowledged that NAB had invested significantly in programs of work so that its financial crime risk capability could mature.
It also said NAB was co-operating fully, and had demonstrated a “sustained commitment to addressing Austrac’s concerns”.
The financial crime agency has a wide range of enforcement options, including civil penalty orders, enforceable undertakings, infringement notices and remedial directions.
Crown Perth probe
Meanwhile, Crown said it had been informed by Austrac’s regulatory operations branch that the agency had started a formal investigation into the compliance of its casino in Perth.
This follows the announcement last October of a similar investigation into Crown Melbourne.
“Crown Perth will fully co-operate with Austrac in relation to this process,” Crown said in a statement.
Austrac said in a statement that it worked closely with state and territory regulators, including WA Racing, Gaming and Liquor and law enforcement partners to actively address the significant risks of money laundering through casinos.
Star Sydney under scrutiny
Star Entertainment also joined the list of companies revealing on Monday they were the subject of Austrac investigations into “potential serious noncompliance” with anti-money laundering and counter-terrorism financing laws.
Star, which operates casinos in Sydney, Brisbane and on the Gold Coast, said Austrac’s assessment had focused on Star Sydney’s management of customers identified as high-risk over periods between 2015 and 2019.
No decision had been made by Austrac on a regulatory response or enforcement action, Star said.
Adelaide casino probe
SkyCity, which operates the Adelaide casino and three facilities in New Zealand, said Austrac’s concerns related to ongoing customer due diligence, adopting and maintaining an AML/CTF program, and compliance with Part A of an AML/CTF program.
The concerns were identified in an Austrac compliance assessment which started in September 2019 and focused on SkyCity Adelaide’s management of customers identified as high-risk and politically exposed over the periods July 1, 2015-June 30, 2016 and July 1, 2018-June 30, 2019.
“Austrac has made clear that it has not made a decision regarding the appropriate regulatory response that it may apply to SkyCity Adelaide, including whether or not enforcement action will be taken,” a SkyCity statement said.
“Austrac has indicated that it will request information from SkyCity as part of its investigation.
“SkyCity will fully co-operate with Austrac in relation to those inquiries and with the investigation of SkyCity Adelaide.”
An Austrac spokesperson said the agency worked with state and territory regulators, including Liquor, Gambling and Lotteries SA and law enforcement partners to address the risk of money laundering through casinos.
As a subsidiary of SkyCity Entertainment, the NZ Department of Internal Affairs had also been notified of the enforcement investigation.
Austrac said it would not comment further on the actions because investigations were continuing.
Austrac’s biggest penalties so far have been extracted from the banking industry, including a record $1.3bn fine imposed on Westpac last September for millions of transgressions of the AML/CTF Act.
Commonwealth Bank paid a then-record fine of $700m for similar contraventions in 2018.
Ms Rose, however, says that banking is not the only high-risk sector.
The work undertaken on the casino industry, she says, has raised awareness of the impact of financial crime, and the need for mutual public and private sector efforts to combat it stands in stark contrast to film and television programs that have long glorified organised crime and money laundering, perpetuating the myth that it’s victimless crime.
“This is far from the reality,” the Austrac chief says.
“As regulation and law enforcement efforts are revealing the devastating real-life impacts financial crime has on everyday Australians, I am buoyed by this significant shift in thinking and behaviour.
“Removing profit from criminals and making it harder for them to exploit our financial system will have the greatest long-term impact on protecting our community from harm and it requires us all to do our part.”
Originally published as NAB, Crown, Star and SkyCity targeted in Austrac crackdown
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