Crown Resorts in AML crosshairs as AUSTRAC’s enforcement team eyes next target

Australia’s largest casino operator is facing enforcement action from the Australian Transaction Reports and Analysis Centre (AUSTRAC) following a 12-month review of its compliance controls that began in September 2019.

Crown Resorts said in a filing with the Australian Securities Exchange (ASX) that it was working with the agency’s Regulatory Operations branch to address the problems with its anti-money laundering and counter-terrorism financing (AML/CTF) program.

“These concerns were identified in the course of a compliance assessment that commenced in September 2019 and focused on Crown Melbourne’s management of customers identified as high risk and politically exposed persons,” the casino operator said in an ASX filing.

“The potential non-compliance includes concerns in relation to ongoing customer due diligence, and adopting, maintaining and complying with an AML/CTF program.”

A spokesperson for AUSTRAC confirmed that the agency had commenced an enforcement investigation into Crown Melbourne.

“The enforcement investigation is a result of an AUSTRAC compliance assessment that commenced in September 2019. AUSTRAC won’t comment further as the investigation is ongoing.”

The ongoing customer due diligence (OCDD) obligations are set out in s36 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Reporting entities have an obligation to monitor customers on an ongoing basis to “identify, mitigate and manage” the risk of money laundering and terrorism financing risks.

Recent enforcement actions against Australian banks have highlighted the need to continue to mitigate and manage AML/CTF risks after the initial customer onboarding has taken place. 

Crown Melbourne said it would “respond to all information requests in support of the investigation and fully cooperate with AUSTRAC in relation to this process.”

The action comes just weeks after AUSTRAC’s enforcement team reached an agreed settlement with Westpac Banking Corporation for more than 23 million breaches of the AML/CTF Act. The proposed settlement is due to go before Justice Beach in the Federal Court next week. 

Major investigation

AUSTRAC’s investigation into Crown Resorts has put pressure on the gaming giant ahead of a planned casino opening in Sydney in December. The company is already facing a parliamentary inquiry in New South Wales, which has uncovered significant failures in its AML/CTF program. The inquiry unearthed allegations of “dysfunctional” senior management, poor risk control and issuing false public statements.

Billionaire James Packer controls a 37% stake in the listed gaming giant. He has signalled his intention to reduce his stake in the company, which will hold its annual general meeting on Thursday. At the regulatory inquiry this month Packer acknowledged that he demanded frequent trading updates from management, despite having no official role, while negotiating a series of takeover deals which never eventuated, all unbeknownst to shareholders.

The inquiry has already asked Crown’s directors why the company is opening a casino during a review which will decide if it can keep its licence.

It was triggered by media reports in mid-2019 which accused Crown of doing business with casino tour, or “junket”, operators who had not been vetted for organised crime links. Crown initially denied the allegations in full-page newspaper advertisements but has acknowledged at the inquiry parts of the denial were misleading.

Shares of Crown fell 10% on the news by late morning on Monday, compared to a higher overall market.

“It will be volatile for a time. This has got uncertainty written all over it,” said Mathan Somasundaram, CEO of investment researcher Deep Data Analytics.

This report was written by Nathan Lynch, APAC Manager, Regulatory Intelligence, Thomson Reuters. Additional reporting by Byron Kaye, Reuters.

Nathan Lynch is an experienced writer, public speaker, manager and technology enthusiast in the field of financial regulation and risk management. At Thomson Reuters, Nathan leads a team of experts who provide breaking news, deep analysis and practical guidance to risk practitioners in the global financial services sector.
Nathan manages Thomson Reuters’ award-winning Regulatory Intelligence team across the Asia-Pacific region, tracking developments in financial services law, regulation, financial crime and risk management.
Nathan has been involved in building innovative, tech-based businesses in the financial services “regtech” sector — including Complinet Australia and the Thomson Reuters Risk business.

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