AUSTRAC Submits More Money Laundering Accusations Against Crown
The financial crime watchdog in Australia, known as AUSTRAC, has raised further accusations of money laundering against Crown with more fines expected. Star Entertainment Group and New Zealand’s SkyCity are also under the microscope as authorities ramp up the pressure on casino operators. The timing couldn’t be worse for the industry, which has suffered a major drop in Gross Gaming Revenues during the pandemic.
The Crown Resorts tower in Melbourne is the venue being put under the microscope by AUSTRAC. The financial regulatory agency is probing the entire industry, which it believes is on the brink of being completely compromised by organized criminals. ©torcasiojohn/Pixabay
It’s been a terrible past 18 months for Australia and Oceania’s leading casinos; one of the biggest scandals in Australian gambling occurred, exposing mass corruption and money laundering at Crown Resorts. The pandemic also brought along a fresh set of economic challenges, with footfall severely reduced and revenues drying up – casinos opted for mass redundancies to slash costs and stay afloat. The culmination of all of this has damaged the reputation of big casinos in Australia, public and political opinion reaching new depths never seen before.
Up until now, the regulatory response to this crisis has been fairly muted. In fact, the gaming commission has even been accused of failing in its duties to adjudicate the rogue behavior committed by the casinos. The Victoria Commission for Gambling and Liquor Regulation was highlighted as not being fit for purpose due to its systematic failure to deal with evidence of money laundering at Crown Resorts.
But that lacklustre stance is not something that AUSTRAC can be easily accused of. The anti-financial crime agency has ramped up its indictment of the Australian casino industry, which evidently is in need of a major clean-up if it is to continue to be seen as a sustainable part of the domestic economy. Launching a fresh set of investigations into the three largest operators in Australia, the agency will evaluate the suitability of their operating license, and whether larger fines are suitable given the evidence they have collected.
AUS Casino Industry Could Be Compromised by Organized Crime
AUSTRAC has been probing the day-to-day operations of Crown for the best part of a year by this point, and during that time shocking revelations including systematic money-laundering and full-scale collaboration with known criminals have been revealed. It is not quite clear to what extent corporate casinos in Australia are beholden to organized criminal groups, but one thing is for certain, AUSTRAC has got a clear picture of what they are dealing with.
According to the CEO of AUSTRAC, Mrs. Nicole Rose, the entire Australian casino industry is at risk of being completely compromised by organized crime gangs. Due to the products and services they offer, there is a direct risk factor attached to the casinos in Australia, and the risk of them being exploited as money-laundering vessels has never been so prominent. The AUSTRAC chief made these concerns public in The Australian, a national newspaper, just hours before the casinos announced the investigation in their financial statement filings to the stock exchange.
Demonstrating the seriousness of their concerns, AUSTRAC has already opened enforcement action against Crown Resorts, a wider compliance audit against the entire domestic casino industry, and a separate investigation against National Australia Bank Ltd. All three of the leading casino companies in Australia acknowledged that concerns about their handling of ‘high-risk’ wealthy customers and indicated that they would cooperate fully with any ongoing investigations against them.
Investigation Spells Bad News for Big Three AUS Casinos
The intensification of the probe into mismanagement issues at Australia’s leading casinos is expected to have a myriad of cascading negative effects on their business operations. Blackstone’s acquisition of Crown Resorts is the most pertinent casualty of the latest investigation, and the deal worth in excess of $6 billion could derail as a result of the action.
If Crown Resorts, and its potential merger partner Star Entertainment, are found to have not properly implemented enforcement of regulations at their casinos, then rejection of the proposed merger & acquisition activity is an obvious consequence. It remains a critical time for all parties involved in the deal, as the multiple possible scenarios that will directly result from the findings could go in completely opposite directions.
On the contrary, if Star Entertainment is found to have acted with proper standards and actively tried to eliminate the exposure of money-laundering risk within its business, then it is likely that regulators will see the firm worthy of merging with Australia’s largest casino brand, thus keeping the business under domestic control. Reducing the influence of foreign investment at these casinos does now seem a likely compromise the casinos will have to broker with the regulator to regain their trust and confidence.
In any case, the investigation spells bad news for all the casinos involved, and the shares of each were trading down by approximately 3% this week. Worse still, Crown has been revealed to have potentially crossed another regulatory boundary as it was revealed recently they had attempted to raise around $160 million between 2012 and 2016 by selling gambling chips to international clients on credit, this misstep has initiated another investigation against them. The case into financial crimes at Australia’s largest casinos continues.
