Crown Resorts Defends Itself Against Record AUSTRAC Fine

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Crown Resorts, the Australian casino operator that has been embroiled in money-laundering scandals for the past couple of years, risks facing another enormous financial penalty. It’s now in court trying to avoid having to pay a record-setting AUD450-million (US$398.98 million) fine due to its failure in effectively preventing money laundering and terrorist financing at its casinos in Melbourne and Perth.

Years of Alleged Misconduct

In a collaborative effort, AUSTRAC, Australia’s financial watchdog, and Crown are trying to settle their differences in Federal Court. AUSTRAC asserts that the casino operator is liable for 546 instances of violating money laundering regulations, resulting in the massive fine.

If paid, this extraordinary fine, associated with terrorism-related offenses, would set a new record as the largest amount ever paid by a brick-and-mortar casino anywhere across the globe. Furthermore, such a profound financial consequence would undoubtedly have significant ramifications on the activities of Crown casinos located in Melbourne and Perth.

During the initial day of a two-day trial at the Federal Court in Sydney, Judge Michael Lee evoked memories of the Watergate scandal. He likened it to trying to decipher the realm of individuals within Crown who possessed knowledge and when they acquired it.

The junket program organized by Crown, which permitted casino operators to engage in high-stakes gambling with affluent individuals in exclusive gambling establishments, became a significant focal point during today’s hearing. According to court proceedings, the program, active from March 2016 to March 2020, involved various junket companies, such as SunCity from Macau, operating within both Crown properties and their own establishments.

Between 2017 and the start of 2018, a total of 58 reports regarding dubious business activities were submitted regarding SunCity. These are in addition to three more that law enforcement officials investigated.

The police examined claims surrounding deposits made by two individuals, one amounting to approximately AUD700,000 (US$465,080) and the other for $1.5 million (US$996,600). Furthermore, there were allegations that an employee at the casino purportedly handed over hundreds of thousands of dollars to someone in the casino’s parking lot.

High Wealth Doesn’t Mean High-risk

AUSTRAC has identified over 60 Crown gamblers who were “high-risk” customers, meaning the operator should have conducted lengthy background checks. 43 of them belonged to the junket operator category and represented over AUD69 billion (US$45.84 billion).

Crown Melbourne and Crown Perth had flagged a minimum of 40 of them as “suspicious.” However, Crown allegedly had an unwritten policy that the super-rich were automatically safe from advanced scrutiny.

AUSTRAC issued its fine this past May; however, a federal court judge has to approve it. This is in addition to the AUD200 million (US$132.8 million) Crown already paid in Victoria to settle similar claims.

The watchdog has suggested that the operator make an initial payment of AUD125 million (US$83.03 million). The interest-free balance would then have to be paid within two years.

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