Crown, a major casino operator, could face a whopping penalties of about $500 million for failing to prevent money laundering and terrorism financing at its Melbourne and Perth casinos. The Australian Transaction Reports and Analysis Centre (AUSTRAC), in collaboration with the Crown, filed a lawsuit in the Federal Court seeking a $450 million penalty for 546 violations of anti-money laundering rules.
If levied, this penalty would be the highest ever paid by a casino in the world, and it would apply to Crown’s businesses in Melbourne and Perth. Judge Michael Lee drew an analogy to the Watergate scandal at the inaugural hearing in Sydney’s Federal Court, aiming to determine who within Crown knew about the crime and when they were aware of it.
The court discovered that the casinos’ former leadership had failed to create and monitor effective programmes despite internal concerns and police reports on several occasions. The main emphasis of Monday’s hearings was Crown’s junket programmes, which allowed unvetted high-wealth players to gamble in private rooms.
These programmes featured junkets such as SunCity, a Macau-based operator that ran rooms within Crown and operated its own cash offices between March 2016 and March 2020. During this time, the SunCity room got 58 suspicious matter complaints, prompting three police investigations. Investigations revealed cash transactions ranging between $700,000 and $1.5 million, and an employee allegedly passed hundreds of thousands of dollars to a third party in the casino’s parking lot.
AUSTRAC’s lawyer, Michael Hodge KC, informed the court that cash was brought into the room by unidentified individuals and exchanged by junket operators with other unknown persons. “Cash was colorfully carried in paper bags, shoeboxes, and briefcases,” he added. Due to inadequate monitoring practices, it was difficult to ascertain the full extent of Crown’s breaches, hindering accurate documentation and record-keeping.
Justice Lee questioned Mr. Hodge’s submission that Crown had not deliberately failed in its obligations but had done so out of negligence, despite profiting from the affected programs. The judge sought to understand the reason behind Crown’s actions and stated, “If there wasn’t a deliberate intention to contravene the laws, then what was the reason? People just didn’t understand? What am I supposed to take as the reason?”
In response, Mr. Hodge highlighted that, while the cause of Crown’s key failures had not been agreed upon, it was clear that they had not intentionally broken the law, given the leadership turnover. However, Justice Lee was hesitant to call the considerable changes in Crown’s leadership, board, and management, as well as the discontinuation of junkets, proof of genuine regret.
As part of the settlement, Crown admitted to breaking the law by failing to analyze the risks it faced and agreed to develop a transaction monitoring programme appropriate for the size of its business. The court was also told that the Crown had automatically classified players, even high-wealth spenders, as low-risk for money laundering or illegal activity. At least 60 high-risk customers were discovered by AUSTRAC, 43 of whom were junket operators, some of whom were categorized as “politically influenced people,” with a cumulative turnover of $69 billion.
Crown Melbourne and Crown Perth reported over 40 individuals as questionable, while 38 were involved in the transfer of huge sums of money totaling approximately $450 million. Crown took a similarly lenient attitude to jurisdictions from where money was transported in or out, with all places automatically judged low-risk for money laundering.
Crown had already been fined, including a $120 million fine in November for failing to encourage safe gaming at its Melbourne casino. In addition, the Victorian Gambling and Casino Control Commission fined Crown Melbourne $80 million in May for allowing patrons to access monies using credit or debit cards.
These huge fines come at a time when government agencies are increasing their examination of casino and gambling operations, with inquiries in various states ruling that Crown is ineligible to hold a casino license. The business was only awarded a provisional license to operate its $2.2 billion Barangaroo casino, which expires in December, after significant changes were made to its board and management.
AUSTRAC CEO Nicole Rose emphasized the casino sector’s vulnerability to exploitation by organized criminals looking to launder money obtained from drug sales or human trafficking in a statement. She noted, “Crown’s contraventions of the AML/CTF Act meant that a range of obviously high-risk practices, behaviors, and customer relationships were allowed to continue unchecked for many years.”
The hearing will resume to examine a payment plan for Crown, with AUSTRAC recommending a $125 million upfront payment without interest. This scheme was criticized by Justice Lee, who called it “making the Commonwealth Crown’s banker.” The court also discovered that the Crown Group’s combined assets currently total $5 billion, suggesting possible financial difficulty.
The post Crown Faces Landmark Penalty for Money Laundering Breaches at Melbourne and Perth Casinos appeared first on iGaming.org.