Australia’s anti-money laundering watchdog has launched civil proceedings against Crown Resorts in what appears to be a reaction to its own past failures at detecting the casino operator’s transgressions.
In late February, Australia’s financial crimes watchdog AUSTRAC served Crown Resorts with a statement of claim for the commencement of civil penalty proceedings against Crown Melbourne and Crown Perth, alleging contraventions of obligations under the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act.
The proceedings, stemming from an investigation into potential non-compliance by Crown, were launched some five months after a Victorian Royal Commission found the operator of Victoria and Western Australia’s state-wide monopoly casinos unsuitable to retain its casino license for Crown Melbourne, albeit with a two-year reprieve to return to suitability. Last month, Crown was similarly found unsuitable to operate Crown Perth by a Western Australian Royal Commission. Other AUSTRAC investigations are currently underway into Star Entertainment Group and SkyCity Entertainment Group. But the timing of such action – coming on the back of inquiries into Crown in three separate states – should raise eyebrows. Certainly, questions should be asked as to AUSTRAC’s own failures to adequately supervise the sector or detect non-compliance with anti-money laundering and counter terrorism financing laws – a key focus of the Crown inquiries and of public hearings currently being held into The Star Sydney.
While regulators have been roundly criticized during this inquiry process, AUSTRAC has largely escaped criticism, even though it has only taken meaningful action retrospectively. That’s despite the fact that AML is a federal responsibility where gaming regulators have had no authority, powers or relevant AML/CTF capability, and where supervision of AML/CTF compliance comes firmly under AUSTRAC’s purview.
It is therefore significant that the national level AML watchdog’s own reporting of compliance by Australia’s casinos, prior to the 2019 media reports that first uncovered serious money-laundering concerns at Crown Melbourne, failed to identify any of the issues raised since.
In the Victorian Commission for Gambling and Liquor Regulation’s Sixth Review of the Casino Operator and Licence, completed in 2018, it was stated that, “Agencies consulted indicate that Crown Melbourne is generally compliant with its AML/CTF obligations and will respond to criminal investigation inquiries. Agencies have ongoing regular liaison arrangements with Crown Melbourne and anticipate this will continue in the future.
“AUSTRAC has advised that it will continue to actively collaborate with Crown Melbourne to ensure its ongoing compliance with the AML/CTF regulatory framework and to ensure the continuous enhancement to the quality of AML/CTF reporting and commitment to AML/CTF by Crown Melbourne.”
Likewise, the last regular review into The Star Sydney, completed in November 2016, referenced a compliance assessment undertaken into The Star, stating, “The casino’s responses satisfied AUSTRAC, and as a result AUSTRAC closed the compliance assessment.”
On junkets, the review noted, “Part of the proper scrutiny of junkets … is knowing who are the junket representatives. AUSTRAC monitors and investigates these persons also.”
However, the man who conducted the review, Jonathan Horton QC, ultimately wrote, “In conclusion, I note that in all the interviews with law enforcement and like bodies, there was no assertion made that the junket component of The Star’s business is being conducted less than honestly.”
One of the issues to arise from recent inquiries has been the lack of any meaningful cooperation between AUSTRAC and state regulators, with regulators claiming to have been left in the dark on matters of AML. And yet it is these same regulatory bodies now being torn apart in Victoria and Western Australia, leaving AUSTRAC to face little scrutiny of its own.
In announcing civil penalty proceedings, AUSTRAC stated that it “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.”
There is no doubt AUSTRAC has made its intention to punish Crown for past indiscretions clear, but the question has to be asked whether this is really just grandstanding designed to gloss over the agency’s own oversights.
