AUSTRAC Highlights Failings in Regulation of Junket Operators

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A revised report by the Australian Transaction Reports and Analysis Centre (AUSTRAC) has revealed weaknesses in the way junket operators are regulated and the degree to which the regulator can prevent money-laundering and other crimes in Australia.

AUSTRAC Report Reveals Overall Junket Regulation Weaknesses

Australia may be struggling with tackling money laundering operations, which stem from casino junket operators, and preventing tainted funds from entering the country, a revised 2017 AUSTRAC report has revealed.

According to the report, the regulator was aware of the fact that Asian junket operators and the high-roller VIP customers they brought posed a threat insofar as funding terrorism and money laundering were concerned.

The reason behind this is the fact that most of the funds used in those gambling operations weren’t properly sourced. Specifically, the regulator argued that casinos were left in the dark about agreements made between a junket operator, players and any third-parties involved.

Based on these findings, the report argued that this was a breach of the junket tour operator (JTO) relationship, as it revealed clear opportunities to launder money and participate in other financial crimes.

Casinos Not in a Hurry to Act

However, casinos failed to act or downplayed AUSTRAC’s concerns when presented with the findings, the report argued. The report comes at a time when the NSW Independent Liquor and Gaming Authority (ILGA) is investigating Crown Resorts over perceived licensing failures involving junket operators and whether the property should have its license suspended or revoked completely.

Based on ILGA’s findings so far into the probe, Crown’s main junket partner, Suncity, might have ties to triads, criminal organizations in Asia that control the gambling industry and are involved in various illicit activities.

According to the investigation, criminal syndicates may have used Crown’s Melbourne and Perth properties to launder money. While AUSTRAC previously approved of Crown Resorts’ junket operator relationships, the regulator has changed tune.

Meanwhile, the Victoria Commission for Gambling and Liquor Regulation (VCGLR) is waiting for a final ruling from independent probes – including ILGA’s – before it decides how to address the issue with Crown.

In fact, AUSTRAC chief executive Nicole Rose said that the criteria based on which junket compliance was assessed were dated. Rose argued that due to the nature of junkets, i.e. them being hosted offshore, it was difficult for AUSTRAC or anyone to properly regulate junket operators.

Give Operators More Responsibilities, Says Austrac

AUSTRAC pointed out other weaknesses in the existing framework, too, arguing that casinos were currently dependent on the Department of Immigration and Border Protection for AML and KYC verifications, unlike the United Kingdom where each operator must have a dedicated department for that.

Moreover, Rose argued that Australia’s primary focus of concern has to do with money-laundering rather than a broader approach to potentially illicit activities happening with the help of junket operators.

In other words, Austrac is unable to regulate junket operators leaving Australian casinos open to becoming unwitting accomplices to illegal financial crimes.

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