Crown should lose gaming licence due to systemic compliance failures: laundering probe

The Victorian royal commission into Crown Resorts’ gambling activities has heard that the company should be stripped of its licence due to a raft of compliance and money laundering failures. The recommendation came from the Victorian government’s lead lawyer in the case, Adrian Finanzio, during his closing submissions on Monday.

Money laundering concerns have dominated the inquiry, which looked at the extent to which Crown failed to address its financial crime risks.

“There are well-recognised, inherent risks in the running of any casino. It is imperative that these are guarded against. The legislative framework expressly identifies those risks: the risks of money-laundering, criminal influence and exploitation, risk of harm to people who are vulnerable to gaming addiction,” Finanzio said.

“Crown became a place where its banks were actively used for the purpose of laundering money, and where enormous volumes of cash, likely carried by money mules serving criminal interests would be walked in off the street in translucent plastic bags and placed into circulation through the casino.”

Bombshell recommendations

The bombshell recommendations came in the wake of revelations that Crown had moved gambling funds through its accommodation business to avoid money laundering reporting obligations and to minimise state royalty payments.

Finanzio also highlighted systemic cultural failures that originated with the chairman of the board and senior management. The lawyer said in closing that the state of Victoria had “little confidence” in Helen Coonan, the former Australian communications minister, who chairs the company. The royal commission also heard that it could take years before Crown is deemed fit and proper to run gambling operations in the state.

Finanzio said the inquiry had shown that Crown’s chairman and board had failed to build a compliance culture across the organisation.

“The evidence reveals serious misconduct, illegal conduct and highly inappropriate conduct which has been encouraged or facilitated by a culture which has consistently put profit ahead before all other considerations,” Finanzio said. 

Ongoing remediation program

The Victorian inquiry heard Crown’s compliance remediation project will not be completed until late-2022 at the earliest.

“On any view Crown remain in a state of present unsuitability for some time,” Finanzio said.

The recommendations come in the wake of the New South Wales inquiry into Crown Resorts’ fitness to hold a gambling licence for its new Barangaroo property. There is also a separate royal commission underway in Western Australia, which is focusing on compliance weaknesses in Crown’s Perth gambling complex.

The recommendations in the Victorian inquiry follow months of hearings. They must now be considered by Victorian gaming royal commissioner Ray Finkelstein, the federal court judge who is overseeing the proceedings. 

The recommendations have placed pressure on Crown to change its ownership or commit to a merger with another major gambling entity. 

“The program of corporate rebirthing that Crown says is underway is insufficient and so uncertain as to lead this commission to the conclusion that there is not a sufficiently clear pathway to suitability,” Finanzio said. 

“After the evidence listed in these hearings, it remains clear that Crown Melbourne is not fit to hold a licence now.”

The Sydney inquiry accused Crown of turning a blind eye to organised crime, allowing major shareholder James Packer to have an inappropriate level of control over decision making, and ignoring the safety of staff who were jailed in China for breaching that country’s anti-gambling laws.

Crown said in a statement that it was “carefully reviewing” Finanzio’s remarks before giving its own closing submission to the inquiry in response.

Related:
IMPACT ANALYSIS: ASIC drops criminal investigation into alleged “fees for no service” conduct by AMP
Transaction monitoring must sit at heart of AML compliance, says top enforcement lawyer

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.

Leave a Reply

Subscribe to Business Insight

Discover best practice and keep up-to-date with insights on the latest industry trends.