AUSTRAC Launches Crown Money Laundering Lawsuit
Accepting Blackstone’s $8.9 billion offer was meant to be the start of a new era for Crown Resorts but that is not the case. AUSTRAC poured another helping of negativity on the Australian gambling giant last week. The Australian Transaction Reports and Analysis Centre (AUSTRAC) has started legal proceedings against crown. The lawsuit is in relation to money laundering breaches.
Nicole Rose is the AUSTRAC CEO. Rose said Crown failed to meet its anti-money laundering obligations. Its failure made Australia’s financial system vulnerable to criminal exploitation.
“AUSTRAC’s investigation identified poor governance, risk management, and failures to have and maintain a compliant AML/CTF program detailing how Crown would identify, mitigate, and manage the risk of their products and services being misused for money laundering or terrorism financing.”
“They also failed to carry out appropriate ongoing customer due diligence including on some very high-risk customers. This lead to widespread and serious non-compliance over a number of years. AUSTRAC has taken this strong action to achieve enduring change and ensure Crown will fully meet their obligations to protect themselves and Australia’s financial system from criminal activity.”
AUSTRAC Case Highlights High Rollers’ Value
The regulator has never hidden its negative feelings about casino junkets. However, it washed it hands of junkets regarding regulating them, putting the onus on casinos. Filed court documents specifically mention casino junkets and the customers they attract.
Sixty mega-rich foreign nationals caused 83 contraventions of AUSTRAC rules. In addition, those 60 players turned over a staggering $70 billion from March 1, 2016, and Crown won $1.1 billion from them.
The regulator accuses Crown of “smurfing” and “cuckoo smurfing” for Chinese high rollers. Smurfing is breaking down a large sum of money into smaller deposits to avoid detection. Current rules dictate casinos must inform AUSTRAC of any transaction over $10,000. Cuckoo smurfing is moving money into legitimate bank accounts before using it. For example, a Chinese high roller sends money to an Australian company or person, which then deposits at the casino for the gambler. The money appears to come from a legitimate source so is not strictly vetted.
Masses of Evidence Against Crown
Not performing a thorough investigation is not something you can accuse AUSTRAC of. The stacks of evidence it has on Crown’s indiscretions are quite staggering. One court document spans 862 pages, each documenting in great detail Crown’s failings.
Several pages talk about Customer 47, a customer of Crown Melbourne from June 2012 to December 2019. Customer 47 turned over $1,166,247, and lost $371,797 with an average bet of $578. However, their betting escalated. In 2015, Customer 47 turned over $85,836,300, and lost $2,466,855 with an average bet of $16,240. Crown did not report this to AUSTRAC despite the huge differences.
The same customer showed signs of money laundering, signs Crown failed to act on. For example, they deposited $87,000 in cash on November 23, 2014, and withdrew $344,310 the following day via telegraphic transfer, and another $10,000 in cash.
The stacks of evidence against Crown are damning. Any judge looking at it will have no other choice but to side with AUSTRAC.
Star Entertainment Under Investigation
It is not only Crown that finds itself in hot water with AUSTRAC because Star Entertainment is also under investigation. The regulator launched its investigation into Star’s Sydney property, mostly about money laundering. However, the evidence it uncovered led to AUSTRAC expanding its investigation to Star’s other properties.
The investigation began after Nine’s The Age and Sydney Morning Herald got its hands on a KPMG audit from 2018. The paperwork shows Star disguising hundreds of millions of dollars worth of withdrawals as hotel expenses. Star went as far as using special credit and debit cards for the deed.
Share in Star plummeted almost 31% in the week following the investigation’s start.
