The financial crimes watchdog AUSTRAC has launched an unprecedented series of probes into the record-keeping and internal surveillance processes of major casino groups Crown, Star City and The Star, as well as possible non-compliance at the National Australia Bank.
Monday saw separate announcements from each of the four companies revealing the AUSTRAC interest in their affairs in the sensitive areas of money laundering and anti-terrorism financing.
Like SkyCity, The Star said AUSTRAC’s concerns were identified in the course of a compliance assessment commenced in September 2019.
AUSTRAC also widened its investigation into Crown Resorts after uncovering potential breaches of anti-money laundering laws at its Perth resorts and it is looking deeper into NAB’s anti-money laundering and anti-terrorist financing performance.
AUSTRAC revealed in October last year it was formally investigating Crown over “non-compliance with anti-money laundering laws at its flagship Melbourne casino relating to the due diligence it conducted on high-roller patrons.
Crown said on Monday that AUSTRAC had now also identified “potential serious non-compliance” with anti-money laundering laws at its smaller Perth casino.
Problems at the Perth casino (the old Burswood casino) came to light in the Bergin inquiry in NSW in relation to alleged breaches of rules and regulations ahead of Crown’s attempts to open its Barangaroo casino in Sydney.
“As a result, AUSTRAC has initiated a formal enforcement investigation into the compliance of Crown Perth,” Crown said in a statement released to the ASX on Monday.
In a further update on Monday, Crown also said on Monday it had recently received legal advice that Crown Melbourne had breached Victoria’s Casino Control Act between 2012 and 2016 by taking debit and credit card payments from international hotel guests for casino chips, which is banned under state law.
Crown took over $160 million in payments in this manner until it ceased the practice in 2016, it said.
“Crown is continuing its investigations into these matters, including whether it may have breached other laws by reason of the hotel card process,” it said.
Crown said it had notified the Victorian gambling regulator about the breach as well the royal commissions that are under way in Victoria and Western Australia into its suitability to hold a casino licence.
The Bergin inquiry in NSW ruled in February that Crown was unfit to have a licence for its Barangaroo casino.
And the Victoria Royal Commission was told on Monday that Crown Resorts had potentially underpaid the Victorian government by $167 million in deducting marketing expenses from its calculations of gaming taxes from its poker machine revenue.
Victoria’s royal commission into Crown heard on Monday morning that four days after the inquiry was announced, on February 26, the casino giant prepared a spreadsheet calculating “potential gaming tax underpayments”.
Fairfax Media reported that Crown’s executive general manager of gaming machines, Mark Mackay, told the commission that Crown Melbourne CEO Xavier Walsh had asked him and other senior staff to calculate how much Crown had saved between 2014 and 2019 by deducting the cost of running its loyalty scheme from poker machine tax payments.
Counsel assisting the inquiry, Geoffrey Kozminsky, said the total savings for the period clocked in at $167 million after the deduction of costs such as free valet parking, accommodation and hospitality, according to Fairfax.
Mr Mackay also said Crown believed it was entitled to make the deductions, but he agreed the work had been in response to concerns about “ambiguity” in the gaming tax legislation relating to “jackpot” payouts on the casino’s 2628 poker machines.
And in a 4th statement to the ASX on Monday morning, Crown’s main rival, Sydney-based Star Entertainment said on Monday that AUSTRAC had also identified a potential breach of its anti-money laundering obligations relating to due diligence of “high risk and politically exposed” gamblers at its Sydney casino.
The Star said AUSTRAC had not made a decision about whether or not it will take enforcement action, which could lead to fines, and had requested documents from The Star as part of an enforcement investigation.
Fellow ASX-listed casino, the NZ based SkyCity said on Monday that AUSTRAC had also launched an enforcement investigation into a potential failure to conduct proper due diligence on high-risk and politically exposed patrons at its Adelaide casino.
That is now in the hands of AUSTRAC investigators and prosecutors.
Meanwhile the National Australia Bank’s announcement was not in any way connected to the AUSTRAC references from the casino groups.
In its letter, NAB told the ASX that AUSTRAC had advised the bank in a letter dated June, 4 this year that it is AUSTRAC’s view that there is “potential serious and ongoing non-compliance” with customer identification procedures, ongoing customer due diligence and compliance with Part A of NAB’s AML/CTF Program.
“These concerns have been referred to AUSTRAC’s enforcement team, which has initiated a formal enforcement investigation,“ NAB said.
In the letter to NAB, AUSTRAC said that it has not made any decision about whether or not enforcement action would be taken.
AUSTRAC told the NAB that at this stage, it is not considering civil penalty proceedings and that this decision is “reflective of the work undertaken” by NAB to date.
AUSTRAC’s referral to its enforcement team follows regular engagement by NAB with AUSTRAC over a long period of time, both to report issues and keep AUSTRAC informed of progress in uplifting and strengthening the Group’s AML/CTF Program.
NAB said disclosed the existence of AML/CTF compliance issues in various public disclosures since 2017, including most recently in NAB’s 2021 Half Year Financial Report
AUSTRAC has a wide range of enforcement options available to it, including civil penalty orders, enforceable undertakings, infringement notices and remedial directions.
NAB CEO Ross McEwan said in Monday’s statement that the bank would continue to cooperate with AUSTRAC in its investigations.
AUSTRAC has previously brought actions against the Commonwealth Bank and Westpac and obtained substantial fines ($1.3 billion for Westpac and $700 million from the Commonwealth) in agreed settlements of the two actions.
The shares of the quartet all fell in the wake of the news – NAB shares eased 3.1% to $26.64, Crown shares lost 1.5% to $12.50, Star shares lost 2% to $3.89 and SkyCity shares slumped 6.5% to $A3.18.
