Crown Resorts Ordered to Pay AU$450 Million Penalty for Breaching Anti-Money Laundering Laws

Crown Resorts, the prominent land-based casino operator in Australia, has been handed a hefty penalty of AU$450 million (£233 million/€276 million/US$300 million) by the Federal Court for its violations of anti-money laundering (AML) laws.

The court has approved the settlement agreement reached between Crown and the Australian Transaction Reports and Analysis Centre (Austrac) in May, which specifies that the payment will be made over a two-year period.

The case against Crown Resorts dates back to March 2022 when Austrac initiated civil penalty proceedings against the company, accusing it of "serious and systemic" breaches of AML and counter-terrorism financing (CTF) regulations at its Crown Melbourne and Crown Perth casinos. Crown has since admitted to operating in contravention of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

Crown's admissions include the acknowledgment that its AML/CTF programs were not based on appropriate risk assessments and that it lacked adequate systems and controls to manage risks effectively. Austrac found that the company allowed high-risk activities to persist in its casinos without intervention, even maintaining a business relationship with a major casino junket operator despite being aware of allegations of their connection to organized crime.

The regulatory body also discovered that Crown failed to adequately monitor billions of dollars in transactions, significantly impairing its ability to identify and report suspicious activity. Moreover, between March 2016 and December 2018, there were at least 75 suspicious "incidents" involving approximately $23 million in cash within a private gaming room at Crown Melbourne, which was exclusively accessed by a single casino junket operator.

Despite Crown's failings, Austrac acknowledged the substantial and ongoing efforts made by the company to address the identified issues. This led to the agreed-upon penalty of $450 million. Acting Austrac CEO Peter Soros stressed the importance of robust AML/CTF compliance systems and processes within the casino industry and warned that enforcement actions would be taken when serious deficiencies are identified.

Crown Resorts' CEO, Ciarán Carruthers, expressed satisfaction with the conclusion of the proceedings and emphasized the sweeping reforms undertaken by Crown under its new ownership. In June 2022, the private equity giant Blackstone acquired Crown in a deal worth $8.87 billion. Carruthers stated that Crown has made substantial investments, amounting to tens of millions of dollars, to strengthen its financial crime compliance measures and adopt global best practices within the gaming sector.

This case follows a series of regulatory challenges faced by Crown Resorts. In October 2021, the company was deemed "unsuitable" to operate its flagship property, Crown Melbourne, by the Royal Commission of Victoria. However, the license was not revoked due to potential economic repercussions. Instead, the company was subjected to special measures and required to implement 33 recommendations put forth by the Commission. The Bergin Inquiry in New South Wales, launched in August 2019, also concluded that Crown was "unsuitable" to hold a casino license in Sydney but left open the possibility for the company to operate the casino following the implementation of necessary reforms.

The penalty of $450 million imposed on Crown Resorts is one of the largest ever ordered against a casino globally. It serves as a significant warning to all providers of casino and gaming services in Australia that they must establish robust AML/CTF compliance systems and processes to protect both the Australian community and their businesses from serious financial crimes. Austrac remains committed to collaborating with Crown and other regulated businesses, viewing them as the first line of defense in the fight against financial crime. By fLEXI tEAM