AUSTRAC, the official financial crime watchdog of Australia, last week launched investigations into two gaming companies, SkyCity Entertainment and Star Entertainment. Crown Resorts was already under scrutiny for alleged money laundering at its casinos in Perth and Melbourne.
According to the Sydney Morning Herald, on June 7 both SkyCity and Star disclosed that they’re on AUSTRAC’s list due to “potential serious non-compliance” at SkyCity Adelaide and Star Sydney, respectively.
AUSTRAC informed the operators that it’s looking at potential breaches in anti-money laundering and counter-terrorism financing. In SkyCity’s case, the assessment looked at how the firm managed high-risk and politically exposed customers from 2015 to 2016 and 2018 to 2019.
“The matter has been referred to AUSTRAC’s Enforcement Team, which has initiated a formal enforcement investigation into the compliance of SkyCity Adelaide,” said the company in a filing. According to the Herald, an announcement from Star was “nearly identical.” Both companies said they will fully cooperate with AUSTRAC in the probes.
For well over a year, Crown has been under investigation by state regulators for similar problems in Victoria and Western Australia; as a result of that investigation, compiled in the so-called Bergin Report, Crown was not licensed to open a VIP casino at its new multibillion-dollar resort on the Sydney waterfront.
Despite intense scrutiny and damning headlines about its compliance failures, Crown failed to curb instances of problem gambling at its properties as recently as April, two months after the Bergin Report was published. According to the Australian Financial Review, the firm’s head of responsible gaming, Sonja Bauer, admitted as much in testimony before a royal commission in Victoria. Commissioners were told that in 2019, one VIP played for more than 34 hours at a Crown casino before staff forced him to take a break.
Adding to Crown’s problems, the company has been advised by counsel that it also violated the state’s Casino Control Act by processing more than AU$160 million in gambling funds via credit or debit card at Crown Melbourne between 2012 and 2016. Operators are prohibited from providing money or chips for gambling via credit or debit card transactions.
Crown reportedly also avoided paying up to AU$200 million in taxes by classifying comps like free parking as gambling winnings.
Another royal commission is ongoing in Western Australia, home of Crown Perth. As a result, the New Daily reports, Australia’s money-laundering laws and its enforcement of those laws are now under question, with AUSTRAC looking at potential violations by the National Australia Bank (NAB) as well as the three casino companies.
“Australian institutions are spending hundreds of millions of dollars on money-laundering compliance yet are failing to comply fully,” said Louis De Koker, law professor at La Trobe University. “Basically all the big global banks have been fined for money-laundering compliance failures— some repeatedly. … So a real question is: Are the money-laundering compliance expectations reasonable and fit for purpose?”
The investigation of NAB is “a very big warning shot across the bows of all the big banks,” Finance Fellow at Macquarie University Patrick McConnell said. “There is a hodge-podge of systems all talking to each other and making any change is not only expensive, it’s risky.”
