The Australian anti-money laundering agency has filed a civil claim against Crown Resorts, the country’s largest casino operator, alleging that A$69 billion was laundered through the business over a five-year period.
The 900-page statement of claim was filed in the Federal Court on Tuesday, detailing huge volumes of money laundering and extensive breaches of the duty to report suspicious activities to the financial intelligence unit (FIU).
The civil claim alleges that 60 high-profile customers gambled A$70 billion over a five-year period and lost $1.1bn to the casino operator. As a result, a total of A$69 billion was laundered through junkets and high-roller rooms at Crown Resorts, according to the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Some of the high-profile customers included Tom Zhou, also known as “Mr Chinatown”, and Alvin Chau.
The landmark civil claim is AUSTRAC’s first major enforcement action against a casino operator. Previous claims have been settled with Tabcorp, Commonwealth Bank and Westpac Banking Corporation. The claim alleges that Crown Resorts in Melbourne and Perth failed to assess their risks of money laundering and terrorism financing, which made the country’s financial system “vulnerable to criminal exploitation”.
AUSTRAC’s investigation found there was inadequte governance, risk management and “know your customer” failures. It has alleged that Crown failed to maintain a compliant AML/CTF program to “identify, mitigate and manage the risk of their products and services being misused for money laundering or terrorism financing.”
Nicole Rose, AUSTRAC chief executive, said Crown 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,” Rose said. “AUSTRAC has taken this strong action to achieve enduring change and ensure that Crown will fully meet their obligations to protect themselves and Australia’s financial system from criminal activity.”
High-risk customers
The statement of claim says that Crown’s casinos in Melbourne and Perth continued to provide designated services to high-risk customers over a five-year period, without carrying out appropriate ongoing or enhanced customer due diligence.
From March 1, 2016, the nature of these risks was not escalated to senior managers, AUSTRAC has alleged. In cases where the risks were escalated, senior managers ignored those legal and regulatory risks.
“If senior management did consider the ongoing business relationship, appropriate regard was not had to the ML/TF risks,” AUSTRAC said.
“On and from March 1, 2016, designated services provided to these customers involved a turnover by these customers in excess of A$70 billion and losses by these customers (or Crown wins) of about A$1.1 billion. As some of these 60 customers were customers of both Crown Melbourne and Crown Perth, they account for 83 contraventions in total.”
In casinos, turnover refers to the total amount wagered including the reinvestment of any winnings.
The claim said that a total of 447 Crown customers engaged in “repeated patterns of transactions consistent with ML/TF typologies.”
Comprehensive remediation plan
Crown said it was reviewing AUSTRAC’s statement of claim and had developed a comprehensive mediation plan to address the allegations of poor due diligence that emerged from the state-based regulatory inquiries in 2020. The casino operator has overhauled its compliance team in the wake of the bombshell allegations.
Rose said the compliance failures meant that Crown was unable to manage high-risk customers. This allowed the movement of money in “non-transparent ways”, making Crown vulnerable to criminal exploitation.
“This is an important reminder to all casinos in Australia that they must have a strong anti-money laundering program in place to protect their business and the community from serious and organised crime,” she said.
AUSTRAC has indicated that non-banking reporting entities will be a focus of its supervision and enforcement efforts in the year ahead. This includes casinos and pokie machine operators.
The agency’s enforcement investigations into SkyCity Adelaide and the Star Group are continuing.
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ASIC pushing ahead with world-leading rules to govern digital assets
Australian senators keep pressure on for AML/CTF law reform, ahead of Senate report
This article first appeared on Thomson Reuters Regulatory Intelligence.
