Austrac investigations into the Australian casino sector are extensive and ongoing, write Jamie Nettleton and Brodie Campbell, a partner and solicitor respectively, with law firm Addisons. In this article, the lawyers outline some of the key updates and their implications.
On 1 March 2022, the Federal financial crimes regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), commenced proceedings against Crown Melbourne and Crown Perth concerning non-compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.
Australia’s AML/CTF laws are comprehensive, apply to a wide variety of entities, including casinos, and are directed at ensuring that relevant entities have in place sufficient measures to adequately deter, detect and disrupt money laundering, the financing of terrorism, and other serious financial crimes.
Consistent with findings made in connection with evidence given to an inquiry in New South Wales and the Royal Commissions in Victoria and Western Australia, AUSTRAC has alleged systematic non-compliance by both Crown Melbourne and Crown Perth with their obligations under AML/CTF laws.
In particular, AUSTRAC has alleged that Crown Melbourne and Crown Perth failed to:
- appropriately assess and respond to AML/CTF risks;
- implement appropriate AML/CTF programs and risk-based systems and controls;
- establish an appropriate AML/CTF oversight framework;
- implement an adequate transaction monitoring program to identify suspicious activity;
- and implement an enhanced customer due diligence program and conduct ongoing customer due diligence.
AUSTRAC has alleged over 500 breaches by Crown Melbourne and Crown Perth combined in respect of one provision of the Australian AML/CTF Act alone, namely section 36, which relates to requirements regarding ongoing customer monitoring. In some cases, the breaches alleged by AUSTRAC are ongoing and are too innumerable to quantify.
The maximum penalty that can apply for each contravention ranges from $18 million to $22.2 million.
Similar proceedings have been initiated by AUSTRAC previously, each of which resulted in the imposition of substantial fines. For example: in October 2020, the Federal Court of Australia ordered Westpac Banking Corporation to pay a penalty of $1.3 billion, while in June 2018, the Commonwealth Bank of Australia reached an agreement with AUSTRAC to pay a penalty of $700 million.
AUSTRAC is also looking at several other casino operators in relation to compliance with Australia’s AML/CTF laws. For example, in addition to the Federal Court proceedings against Crown, AUSTRAC has announced that it is currently investigating The Star Entertainment Group, which runs casinos in New South Wales and Queensland, and SkyCity Adelaide.
The potential for money laundering to occur in venues is also being closely scrutinized by the New South Wales Crime Commission (NCC). The NSW Government announced in December 2021 that the NCC was conducting an inquiry into money laundering at licensed premises in NSW.
The inquiry will examine the nature and extent of money laundering that may be occurring in NSW pubs and clubs (particularly through electronic gaming machines) and potential vulnerabilities with NSW legislation governing gaming machines, which could be exploited for money laundering.
It is clear that the potential for money laundering to occur in gaming venues is something that will be subject to close attention by AUSTRAC and other Australian regulators. This is also an issue that is likely to be canvassed during the public hearings into The Star, which are currently being conducted by the NSW regulator and which follow alleged AML/CTF shortcomings at Star’s Sydney casino.
Before the AUSTRAC proceedings, Crown had already come under intense scrutiny over money laundering risks and alleged infiltration by organized crime through dealings with overseas junket operators.
Both the inquiry in New South Wales and Royal Commission in Victoria made damning findings in relation to Crown, each concluding that Crown was not suitable to hold casino licenses in the respective jurisdictions and recommending that extensive structural and governance changes be implemented by Crown before suitability could be achieved.
In addition to the NSW inquiry and Royal Commissions in Victoria and Western Australia, Crown was also issued the maximum fine of $1 million by the Victorian gambling regulator in April 2021. This fine was related to an alleged failure to comply with regulatory requirements concerning junket operators.
In December 2021, the Victorian gambling regulator again fined Crown the maximum fine of $1 million, also over an alleged failure to comply with regulatory requirements relating to historical junket operations.
Following the Royal Commission into Crown Melbourne, the Victorian Government has since increased the maximum penalty that may be imposed by the Victorian gambling regulator to $100 million.
In Victoria, the Royal Commission into Crown Melbourne has already resulted in widespread changes to the Victorian gambling regulatory regime. New South Wales similarly has committed to the establishment of a new independent casino regulator.
The extent to which the Perth Royal Commission will result in changes to the Western Australian regulatory regime remains to be seen.