The Royal Commission into the Casino Operator and Licence (RCCOL) found Crown devised what it called “the China Union Pay (CUP) process” to evade Chinese currency restrictions and enable the illegal transfer of funds from China.
The RCCOL Report describes the CUP process as “the use of the Chinese-based bank card, China Union Pay, to allow international patrons to access funds in order to gamble at Crown Melbourne”. This, the report said, occurred between 2012 and 2016.
According to the report, Crown Melbourne issued a room charge bill to a customer, falsely asserting that the hotel had provided services to the person. The patron would pay the bill, using their China Union Pay card, and be given a voucher acknowledging receipt of funds. China Union Pay cards may not be used for gambling.
The patron, accompanied by a Crown VIP host, then took the voucher to the casino cage and exchanged it for cash or chips.
The CUP process, the RCCOL said, was devised because China had imposed restrictions on Chinese nationals transferring money out of China. Between 2012 and 2016, a Chinese national could not transfer more than US$50,000 (£38,274/€45,937) per year to another jurisdiction.
The RCCOL noted that Chinese currency restrictions were well known to Crown Melbourne executives, and as such concluded that the CUP process was devised to enable the illegal transfer of funds from China.
As such, the RCCOL said this activity breached section 68 and section 124 of the Casino Control Act 1991 (CC Act), which it said Crown admitted in its written closing submissions to the RCCOL.
Section 68 prohibits Crown from providing money or gambling chips in a transaction that involves a credit or debit card, as it did with the China Union Pay cards. This measure, the RCCOL said, aims to avoid gambling derived from criminal funds and to support responsible gambling and minimise harm.
Section 124 requires Crown to keep certain accounting records to ensure the handling of money in Crown Melbourne is effectively supervised, as well as that Crown’s taxes and other financial obligations to the state and public are paid in full.
In addition, the RCCOL found that the CUP process constituted “serious acts of misconduct”, given that “wealthy Chinese patrons were assisted in illegally transferring up to $160m in funds”.
Following the Royal Commission, the Casino Control Act was amended to enable the VGCCC to take disciplinary action on the grounds that investigation found Crown engaged in conduct that was illegal or constituted serious misconduct.
The amended Act now also imposes stronger regulatory obligations on Crown and the maximum fine has been increased from $1m to $100m. The VGCCC also has the power to alter Crown’s casino licence in the state, as well as censure Crown and direct it to take rectification steps.
“I welcome the legislative amendments which impose stronger regulatory obligations on Crown and provide the VGCCC with greater enforcement powers,” VGCCC chair Fran Thorn said. “These powers are needed to deter Crown from engaging in the conduct that was revealed during the Royal Commission
“As a first step, we are acting on the Royal Commission’s findings that Crown’s China Union Pay process breached important Victorian regulatory obligations, was illegal and constituted serious misconduct.”
The VGCCC said it would make a further announcement after considering Crown’s response to its notice and determined the appropriate disciplinary action to take. In addition, it said there would be further disciplinary proceedings arising from other matters highlighted in the Royal Commission.
Victoria’s Royal Commission had already deemed Crown “unsuitable” to operate a casino in the state in an initial report published in October last year, but the operator was able to retain its licence over concerns the impact this would have on the local economy.
The Commission said Crown engaged in conduct that was “illegal, dishonest, unethical and exploitative”, adding that the scale of the wrongdoing was so widespread and egregious that “no other finding was open”.
The report also built on findings uncovered during the Bergin Report in New South Wales, in which widespread failings were identified at Crown and was, as a result, also deemed as being “unsuitable” to operate a casino in Sydney’s Barangaroo region.
The Commission recommended Crown be permitted to continue operating under the oversight of a special manager for two years, while undertaking comprehensive reforms to make it suitable to hold a licence independently.
Responding to the latest findings, Crown referred to an announcement on 7 June last year that its board had received legal advice that the CUP process, which ceased in November 2016, contravened section 68 of the CC Act 1991 and it had notified the predecessor of the VGCCC and the Victorian Royal Commission of that matter.
Crown added that it is responding to information requests from the VGCCC and will fully cooperate with the VGCCC on this and any other matters arising from the Victorian Royal Commission Report.
“Crown’s priority remains the delivery of its reform and remediation program to ensure Crown delivers a safe and responsible gaming environment,” Crown said.
Original article: https://igamingbusiness.com/crown-faces-disciplinary-action-in-victoria-over-china-union-pay-process/
