AUSTRAC Starts Federal Proceedings Against Australia’s Largest Casino Operator

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has started civil proceedings against Australia’s largest casino operator, Crown Resorts, alleging “serious and systemic non-compliance” with the country’s anti-money laundering and combatting the financing of terrorism (AML/CTF) laws. 

The action relates to a number of failings at Crown’s Melbourne and Perth casinos and follows proactive compliance work with the casino sector. 

AUSTRAC CEO Nicole Rose said in a statement: “AUSTRAC’s investigation identified poor governance, risk management and failures to have and maintain a compliant AML/CTF program detailing how Crown would identify, mitigate and manage the risk of their products, and services being misused for money laundering or terrorism financing.

“They also failed to carry out appropriate ongoing customer due diligence including on some very high-risk customers. This led to widespread and serious non-compliance over a number of years.” 

The allegations include that Crown Melbourne and Crown Perth:

1. Failed to appropriately assess the ML/TF risks they faced, including the likelihood and impact of those risks, and to identify and respond to changes in risk over time.
2. Did not include in their AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which Crown was reasonably exposed.
3. Failed to establish an appropriate framework for Board and senior management oversight of AML/CTF programs.
4. Did not have a transaction monitoring program to monitor transactions and identify suspicious activity that was appropriately risk-based or appropriate to the nature, size and complexity of Crown.
5. Did not have an appropriate enhanced customer due diligence program to carry out additional checks on higher risk customers.
6. Did not conduct appropriate ongoing customer due diligence on a range of customers who presented higher money laundering risks.

Crown Resorts, founded by Australian billionaire James Packer, recently recommended a A$9bn buyout by Blackstone Group. 

However, its compliance problems date back several years. A Royal Commission in Victoria into its operations determined in October 2021 that while it engaged in “illegal, dishonest, unethical and exploitative” conduct and was unsuitable to hold a casino licence in the state, Crown Melbourne’s economic contribution was too great to close it down.

The results of a similar investigation into Crown Perth’s suitability to hold a casino license is expected later in March. 

In April 2021, the Victorian Commission for Gambling and Liquor Regulation fined Crown Melbourne A$1m for failing to comply with regulatory requirements in relation to the management of junket operations. Months later, in December, Crown Melbourne was fined a further A$1m for non-compliance. 

AUSTRAC allegations in its federal proceedings against Crown, reported by the Financial Times, also include the use of shell accounts to take customer deposits, cash in private gaming rooms being delivered and removed by unknown persons, the casino’s private jet used to transfer large amounts of cash into Australia, and junkets connected to organized crime syndicates.

According to Reuters, the court filing listed 547 contraventions and noted that each violation carried a fine of up to A$22.2m.

Crown says it is taking steps towards improving its systems, processes and resourcing, but recognizes there is further work to do. AUSTRAC will continue to work closely with Crown to address ongoing compliance concerns.

In March, the Australian Securities and Investments Commission [ASIC] told 10 former Crown board members it would take no further action after investigating them for potential breaches of their legal duties as company directors.

FATF Casino Guidance

As cash-intensive businesses, casinos are a high risk. The Financial Action Task Force (FATF) published specific risk-based guidance for casinos in 2008, outlining high-level principles involved in applying a risk-based approach (RBA). It also indicated best practise guidance for governments and legal professionals in the design and implementation of an effective RBA.

“Each country and its national authorities should aim to establish a partnership with its casinos and other DNFBP [Designated non-financial businesses and professions] sectors that will be mutually beneficial to combating money laundering and terrorist financing,” the guidance states.

In FATF’s 2012 AML/CFT standards, updated in 2021, recommendation 28 covers DNFBPs, and calls out casinos specifically. It states that: “Casinos should be subject to a comprehensive regulatory and supervisory regime that ensures that they have effectively implemented the necessary AML/CFT measures.” 

Ongoing Compliance Focus

We’ve previously reported on AUSTRAC’s pivot to a focus on cash-intensive businesses, including the investigation into Crown Resorts, and its guidance on preparing and implementing AML/CFT  for the pubs and clubs sector. 

These latest developments are evidence of AUSTRAC’s continuing efforts to work with state and territory regulators, and law enforcement partners, to share information, support regulation and education of the gambling sector, actively contribute to criminal investigations, and address the significant risks of money laundering through casinos.

AUSTRAC’s enforcement investigations into SkyCity Adelaide and the Star Group continue.

Firms with clients related to gambling businesses should be careful to ensure the firm’s investigations go beyond basic KYC policies to better manage risks that may occur. 

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