The Victorian gambling regulator has used new laws, under which it can levy fines of up to $100m, to launch disciplinary action against Crown Resorts for disguising casino spending as accommodation expenses.
It is the first action the Victorian Gambling and Casino Control Commission has taken and is based on findings of a royal commission into Crown’s Melbourne casino, the group’s biggest, with the regulator promising there will be more to come.
The VGCCC said it informed Crown of the proceedings on Tuesday and would consider the company’s response before making a further announcement.
In his report, tabled in state parliament in October, the royal commissioner Ray Finkelstein found that Crown allowed Chinese high rollers to use China UnionPay cards to transfer money to Crown’s hotel, Crown Towers.
“The hotel issued a room charge bill to the patron, falsely asserting that the hotel had provided services to the person,” Finkelstein said in his report.
“The patron would pay the bill and be given a voucher acknowledging the receipt of funds. Then the patron, accompanied by a Crown VIP host, took the voucher to the cage and exchanged it for cash or chips.”
The inquiry heard that the casino started allowing clients to use this method, which evaded Chinese currency controls, in 2012 at the latest.
Evidence before the inquiry shows that Crown workers raised concerns it might amount to money laundering but the company did not stop allowing the method until after employees were arrested in China in 2016 on allegations of illegal gambling promotion.
In his report, Finkelstein said that “wealthy Chinese patrons were assisted in illegally transferring up to $160m in funds from their country”.
It was one of his reasons for finding Crown was not fit to hold a casino licence, although the company has been allowed to continue to run the Melbourne operation under strict new conditions and after promising to reform itself.
An inquiry in NSW has heard a similar scheme operated at rival casino Star, allowing the transfer of a total of $900m.
After the Victorian royal commission, the Andrews government introduced new laws that allow the VGCCC, the successor to the Victorian Commission for Gambling and Liquor Regulation, to take disciplinary action against Crown based on inquiry findings that the company had engaged in serious misconduct or broken the law.
It also increased the maximum fine from $1m to $100m.
“These powers are needed to deter Crown from engaging in the conduct that was revealed during the royal commission,” the VGCCC chair, Fran Thorn, said.
“As a first step, we are acting on the royal commission’s findings that Crown’s China UnionPay process breached important Victorian regulatory obligations, was illegal and constituted serious misconduct.”
In a statement, Crown said it had received the disciplinary notice from the VGCCC and “has acknowledged the seriousness of its failings in engaging in the China UnionPay practice which we ceased in 2016”.
“Crown is currently reviewing the notice and will be working cooperatively with the VGCCC to close out this and all other outstanding matters stemming from the report of the Victorian royal commission,” the company said.
“Crown’s priority remains delivering on its reform and remediation program to ensure Crown delivers a safe and responsible gaming environment.”
