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For alleged non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws, Australia's corporate watchdog has filed civil penalty proceedings in the Federal Court against Crown Resorts' (ASX: CWN) Melbourne and Perth businesses.
According to AUSTRAC, the action is the result of proactive compliance work with the casino industry, which resulted in a number of detailed enforcement investigations into Crown Melbourne and Crown Perth's compliance.
It also follows Royal Commissions into Crown Resorts' operations in Victoria and Western Australia, with the former finding the parent company engaged in "illegal, dishonest, unethical, and exploitative" conduct and the latter expected to release its final report this month.
Crown failed to meet its AML/CTF obligations, according to AUSTRAC CEO Nicole Rose, leaving the company and Australia's financial system vulnerable to criminal exploitation.
"AUSTRAC’s investigation identified poor governance, risk management and failures to have and maintain a compliant AML/CTF program detailing how Crown would identify, mitigate and manage the risk of their products and services being misused for money laundering or terrorism financing," Rose said.
"They also failed to carry out appropriate ongoing customer due diligence including on some very high risk customers. This led to widespread and serious non-compliance over a number of years.
"AUSTRAC has taken this strong action to achieve enduring change and ensure that Crown will fully meet their obligations to protect themselves and Australia’s financial system from criminal activity."
Crown Melbourne and Crown Perth are accused by AUSTRAC of:
- Failure to assess the money laundering and terrorism financing risks they faced, including the likelihood and impact of those risks, as well as to detect and respond to changes in risk over time.
- Did not include appropriate risk-based systems and controls in their AML/CTF programs to mitigate and manage the risks to which Crown was reasonably exposed.
- Failure to establish an appropriate framework for AML/CTF program oversight by the Board and senior management.
- Did not have a transaction monitoring program that was risk-based or appropriate to Crown's nature, size, and complexity to monitor transactions and identify suspicious activity.
- There was no adequate enhanced customer due diligence program in place to conduct additional checks on higher-risk customers.
- A number of customers who posed higher money laundering risks were not subjected to appropriate ongoing customer due diligence.
Crown was unable to appropriately manage high-risk customers due to a lack of proper controls and processes, according to Rose, allowing money to move in non-transparent ways, making Crown vulnerable to criminal exploitation.
"This is an important reminder to all Australian casinos that they must have a robust anti-money laundering program in place to protect their business and the community from serious and organized crime," says the statement.
"This is an important reminder to all casinos in Australia that they must have a strong anti-money laundering program in place to protect their business and the community from serious and organised crime."
CWN said in a statement that it "considered AUSTRAC's investigation was very likely to result in civil penalty proceedings being commenced against Crown Melbourne and Crown Perth," in its 2021 Annual Report and 2022 half-year results.
"Crown has developed a comprehensive remediation plan which is intended to position Crown as a leader in the industry in its approach to governance, compliance, responsible gaming and the management of financial crime risk. The plan is underpinned by an uplifted organisational culture. Crown recognises the importance of complying with its financial crime obligations and has overhauled its approach to managing financial crime risk, "Crown remarked.
"Crown is currently reviewing AUSTRAC's statement of claim."
AUSTRAC's latest action against an Australian casino operator comes after money laundering investigations into SkyCity Adelaide and Star Sydney were launched last year.
AUSTRAC's investigations into SkyCity and Star are based on "potential serious non-compliance" with AML/CTF rules, similar to Crown's allegations.
By fLEXI tEAM