As per an agreement reached with the Australian Transaction Reports and Analysis Centre (Austrac) in May, Crown will make the payment over two years. This was approved by the Court.
The case dates back to March 2022 when Austrac launched civil penalty proceedings against Crown over a series of allegations. These included “serious and systemic” AML and counter-terrorism financing (CTF) failings at its Crown Melbourne and Crown Perth casinos.
Crown since admitted operating in contravention of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
Specific admissions included that its AML/CTF programs were not based on appropriate risk assessments. Crown also said it did not have appropriate systems and controls to manage risks.
High-risk activities
Upon agreeing the penalty settlement earlier this year, Austrac said this took into account the serious nature of the breaches. Austrac said this meant Crown allowed high-risk activities to take place in its casinos, without intervention, on an ongoing basis.
Examples of this included Crown continuing a business relationship with a major casino junket operator until 2021 despite being aware of allegations the operator was connected to organised crime.
Crown also failed to appropriately monitor billions of dollars in transactions including international payment flows. This, Austrac said, impacted its ability to identify and disrupt possible suspicious activity, as well as to report suspicious matters.
Meanwhile, between March 2016 and December 2018, there were at least 75 suspicious “incidents” involving approximately $23m in cash. These took place in a private gaming room at Crown Melbourne, where one casino junket operator had exclusive access.
Ongoing collaboration with Austrac
In settling these proceedings, Austrac said it took into account the substantial and ongoing efforts undertaken by Crown to address failings. This led to the two parties settling on a figure of $450m.
Acting Austrac chief executive Peter Soros said it will continue to work collaboratively with Crown to help it meeting its obligations moving forward.
“The casino industry by its very nature faces serious risks of exploitation by criminals seeking to launder profits of illicit enterprises,” Soros said. “These criminals make money by harming the community, whether by running scams, selling illicit drugs or trafficking innocent people.
“$450m is one of the largest penalties ever ordered against a casino globally. It serves as a clear warning to anyone who provides casino or gaming services in Australia that they must have strong AML/CTF compliance systems and processes that meet their obligations, to protect the Australian community and their businesses from serious financial crime.
“Austrac is committed to ensuring all regulated businesses, as our first line of defence, do their part in the fight against financial crime. We will not hesitate to take enforcement action when serious failings are identified.”
Sweeping reforms
Responding to the conclusion of proceedings, Crown CEO Ciarán Carruthers said he was pleased to bring the matter to an end. He also noted that under new ownership, Crown has sought to move forward past these historical failings.
In June 2022, Crown was acquired by private equity giant Blackstone in a deal worth $8.87bn.
Blackstone completed the acquisition after obtaining approval to run a land-based casino in the three states where Crown operates – Victoria, New South Wales and Western Australia – with shareholders, state regulators and the Federal Court of Australia also approving the deal.
“Under new ownership and leadership, we have introduced sweeping reforms as part of our Future Crown transformation program,” Carruthers said. “We have invested tens of millions to bolster financial crime compliance and embed global best practice for the gaming sector.
“There is no place for money laundering or terrorism financing at Crown or in our communities.”
Historic failings
Last year’s charges from Austrac were the latest in a series of regulatory issues at Crown. In October 2021, Crown was found to be “unsuitable” to operate Crown Melbourne in Victoria following an investigation by the state’s Royal Commission.
Crown did not lose its licence, due to the potential economic repercussions for Victoria, but was ordered to adhere to special measures. These included 33 recommendations made by the Commission.
This investigation came as a result of the Bergin Inquiry in New South Wales, which was launched in August 2019.
The inquiry assessed Crown’s eligibility to receive a casino licence in Sydney, ultimately deeming it “unsuitable”. However, it said it may still be permitted to operate the casino following implementation of its reforms.
Original article: https://igamingbusiness.com/legal-compliance/legal/australian-court-crown-penalty/
