Austrac has launched court action accusing James Packer’s Crown Resorts of breaching anti-money laundering and counter-terrorism finance laws and continuing to contravene the law due to wholly inadequate oversight by management.
In a lawsuit filed with the federal court on Tuesday, Austrac, Australia’s financial intelligence agency, said ongoing failures to properly vet risky customers – including those brought in from overseas by junket operators and locals with links to people already banned from Crown’s Melbourne and Perth casinos – accounted for 547 breaches of anti-money laundering laws.
Each alleged breach of the law if proven could attract a penalty of up to $22.2m, meaning Crown faces a fine that could theoretically exceed $12bn. However, if Austrac’s action succeeds, a far smaller penalty is likely. The current record fine is $1.3bn, which Westpac agreed to pay to settle allegations by Austrac that the bank breached AML/CTF laws more than 23m times, including by allowing a dozen customers to transfer money to the Philippines in a way consistent with child exploitation.
From March 2016, just 60 high-risk customers turned over $70bn at Crown’s casinos, pumping $1.1bn in losses into the company’s coffers, Austrac said in a concise statement filed with the court.
Austrac alleges that Crown failed to do appropriate due diligence on these customers, which it said included junket operators and players, foreign politically exposed people – a category that can include government officials and their families – as well as people who had been arrested for money laundering or were suspected of being “connected to organised crime”.
The regulator alleges that “many engaged in large cash transactions and transacted with cash that appeared suspicious, including cash in plastic bags, shoeboxes or cardboard boxes, cash in rubber bands, small denominations of notes and counterfeit cash”.
It alleges that an additional 447 customers engaged in transactions that Crown’s external consultants later identified as typical of money laundering or terrorism finance.
Some customers allegedly engaged in multiple breaches.
The legal action follows an investigation that Austrac’s chief executive, Nicole Rose, said showed that Crown failed to put in place and maintain an AML/CTF program that would mitigate the risk that its casinos were misused for money laundering.
“They also failed to carry out appropriate ongoing customer due diligence including on some very high-risk customers,” she said.
“This led to widespread and serious non-compliance over a number of years.
“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.”
She said Crown was working to improve its systems, “however there is further work to do and Austrac will continue to work closely with Crown to address ongoing compliance concerns”.
Crown said it was reviewing the statement of claim filed with the court by Austrac.
It said it “has developed a comprehensive remediation plan which is intended to position Crown as a leader in the industry in its approach to governance, compliance, responsible gaming and the management of financial crime risk”.
“The plan is underpinned by an uplifted organisational culture.”
Allegations that Crown’s casinos were being used for money laundering were made by Nine Entertainment’s newspapers and its flagship current affairs TV show, 60 Minutes, in 2019.
Inquiries in both NSW and Victoria found that Crown facilitated money laundering at its Melbourne and Perth casinos and that some junket operators were linked to organised crime.
Overseas junkets – organised groups of gamblers, typically from Asia – have been a lucrative part of Crown’s business but the company says it no longer accepts them.
Packer’s dominance of the Crown empire, which was also criticised by the inquiries in NSW and Victoria, is set to end after the company’s board said it was ready to accept an $8.9bn takeover offer from US private equity group Blackstone.
Crown shares fell 1.2% on Tuesday morning, to $12.23 – well below Blackstone’s offer price of $13.10.
