October 19, 2020 3 min read


AUSTRAC Launches Investigation into Crown’s Compliance

Crown Resorts announced Monday its flagship casino in Melbourne has been subjected to an investigation by the Australia’s financial crimes regulatory body, the Australian Transaction Reports and Analysis Centre (AUSTRAC). Due to an assessment which started in September 2019, the agency is concerned with the way the casino is handling high net worth individuals (HNWIs) and politically exposed persons (PEPs).

Crown’s International VIP Business

AUSTRAC confirmed the investigation, but refused to comment further on who these HNWIs and PEPs were, but Crown has been courting wealthy Asians for years as part of its international VIP business. It is Crown’s involvement with third parties to attract such persons that brought all the troubles for the company as the New South Wales (NSW) gaming regulator, the Independent Liquor and Gaming Authority (ILGA), started investigating Crown’s suitability for a casino license.

The announcement for the probe from AUSTRAC impacted Crown Resorts’ share price, which plummeted 8.8% to AU$8.19 in early morning trading, extending the total slump of Crown’s stock for the year so far to 32%, further piling pressure on the board ahead of the annual general meeting (AGM).

Lapses in AML Controls

The inquiry into Crown’s suitability for operating a casino regarding its newly-built AU$2.2 billion harborside casino resort in Barangaroo near Sydney has found so far that the company’s anti-money laundering (AML) teams did not monitor the bank accounts for concealed deposits, that Crown’s former CEO and current chairman was unaware of possible money laundering taking place at the casino, and that the major shareholder behind the business was suffering from mental disorder which impaired his memory but was also aware of the links between junket operators and organized crime.

With the AGM taking place on Thursday, the newly-launched probe into the company’s compliance by AUSTRAC would add fuel to the fire of growing calls from investors for a total shakeup of the board and more independence from Crown’s major shareholder, billionaire James Packer.

Hefty Fines at AUSTRAC’s Disposal

Crown Resorts announced it would fully cooperate with the financial crimes regulator and would provide all the information requested by AUSTRAC. Understandably why, when taking into account the range of enforcement options at the regulator’s disposal, which recently settled with Westpac Banking Corp. for a record AU$1.3 billion.

Westpac agreed to pay the mammoth financial penalty for the biggest breach of AML laws in Australia. In contrast, gaming operator Tabcorp was fined only AU$45 million for its AML breaches in 2017. Besides the financial sanctions, AUSTRAC can apply for a civil penalty order from the Federal Court in Australia.

The probe from the financial crimes regulator throws Crown into further trouble to salvage its reputation, while waiting for the decision in NSW which will be handed down in December. If a license is refused, there are speculations that Crown may be left with no other option but to divest.

Lead Author

With 4 years experience as an analyst, Julie—or ‘Jewels’, as we aptly refer to her in the office—is nothing short of a marvel-worthy in her attention to the forex and cryptocurrency space as she quickly became the first pick to co-pilot education to the masses with Mike.

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