Sydney Casinos Go Cashless to Fight Money Laundering
The two biggest casinos in Sydney, Crown Resorts and The Star have both agreed to go cashless as a response to money-laundering scandals embroiling the local industry. The announcement made this week is a major recognition of the internal failings and vulnerabilities that existed in the original model. Making their operations cashless will require an overhaul of digital payment processes, but will certainly stamp out any possibility of further money laundering scandals.
The cashless depositing mechanism being employed by casinos will be a major breakthrough in combatting money-laundering vulnerabilities that currently exist at Australia’s top casinos. ©AhamArdity/Pixabay
The regulators in Australia have been under immense pressure following the Crown Resorts money laundering scandal. As accusations of a cover-up and complicity from regulators swirled, the embattled casino has been on the rocks, and its billionaire founder and majority shareholder James Packer has been dragged through the mud. This unusual move is a bold statement from the country’s biggest casino authority and a statement of their intent to clean up the industry.
An independent inquiry running since last year has already uncovered evidence of money laundering at the casino. The extent of the criminal activities is still largely an issue of debate, but it is certain that the vulnerabilities still exist. Because of these facts, Crown Resorts has been under an immense level of pressure to eradicate the risk of future fraudulent schemes from their operating model.
The Star, whilst not directly implicated in these previous crimes committed by Crown Resorts, still must bare some of the consequences. It does seem like the culture of no-questions cash deposits is a thing of the past. Obviously, the casinos benefited hugely from this lack of oversight, but the time has come to face up to the reality. That is one of a sustainable and legally sounds systems whereby criminals are not able to easily wash their illicit cash through these supposedly legitimate and regulated institutions.
Aussie Casinos Finally Implement Reform
Pressure has been building against the embattled casino to reform its policies, following an inquiry into the scandals embroiling the firm it became clear drastic overhaul was needed. Under the findings of the investigation, Crown’s management was found guilty of a terrible list of charges, including the pursuit of business relationships with known criminal groups, exposing their staff to the risk of prosecution & detainment in foreign countries, and the systematic facilitation of money laundering.
This devastating rap-sheet has prevented the casino from opening its new $1.8 billion in Sydney. The giant super-complex still hasn’t been granted an operating license, putting it at a major risk of succumbing to high-interest rates on its debt-financed capital reserves, all whilst making no revenue. This latest initiative to ban the use of cash at its casinos is Crown’s attempt to settle regulatory concerns, and secure the operating license it so desperately needs.
As the main adjudicator in this business, the Independent Gaming and Liquor Authority (IGLA) has been keeping a watchful eye over these new developments. Interestingly one of the other major players in this ecosystem, The Star, has also outlined its plans to move towards a system of cashless gaming. Exactly how this will be implemented and when is yet to be determined.
One system currently being touted would be for the casino to develop their own deposit system, where customers can access their balance through the use of a debit card. This digital cash system will enable regulators, tax authorities, law enforcement, auditors, and shareholders to actively monitor cash flows at the casinos, thus eliminating the risk of fraud, tax evasion or money laundering. Such a system would need to be reinforced with adequate Know Your Customer (KYC) protocols, identity checks, and links to recognized financial institutions.
On top of these major structural changes at the deposit booth, both casinos mentioned in this article (Crown Resorts and The Star) have pledged to stop using the services of paid-for junket operators. These special purpose financial services companies are the key to extracting capital from China and delivering cash balances for wealthy Chinese nationals at foreign casinos. Their role is essential due to China’s strict capital controls, but as has been discovered recently, assisting with criminal money laundering schemes has become one of their key product offerings.
Is Crown Resorts Finally Out of the Woods?
Crown Resorts have been embattled in allegations of illegal activity for the past couple of years, and despite everything, the casino still remains a bastion of the land-based business, resistant to negative public opinion and political attacks. It remains to be seen what will become of Australia’s biggest casino operator, but this latest announcement to go cashless at their casinos is a real statement of their intention to wipe the slate clean, and clear their shady connections to Asian crime gangs.
One of the major motivating factors behind their shift in operating policy is undoubtedly the ‘white elephant’ Barangaroo tower in the heart of Sydney. This hugely costly project is highly leveraged and not making any revenue, it will remain so until the inquiry into Crown’s operating practices has been concluded.
The inquiry led by a public prosecutor and her team of researchers took a deep look at the company and its finances over the previous two or more years. They concluded that the Crown Resorts corporate culture was what can only be described as toxic, and it required a comprehensive overhaul to be anywhere near the standard expected of such a public-facing enterprise. Since this damning report was served, Crown has replaced virtually all of its executive board, including the ousting of ex-CEO Ken Barton.
Since these actions against Crown, the ILGA have expressed their appreciation at the efforts being taken by the casino to raise its standards. Happening at the same time is a merger and acquisition attempt being tabled, as The Star has announced a bid this week to merge with Crown Resorts to form a new brand together.
