Victoria Casino Regulator Accused of Incompetence

Following the revelations that the Victoria casino regulator failed to spot a series of financial irregularities, they have been labeled incompetent by an independent watchdog. The major lack of operational judgment has thrown the entire regulatory environment for casinos in the state of Victoria, Australia into doubt.

Melbourne skyline.

The Crown Resorts casino in Melbourne was under the jurisdiction of the casino regulator in Victoria. Officials working for the regulator has been accused of gross negligence in their apparent failure to take the necessary steps to mitigate the risk and exposure to systemic money-laundering schemes at the casino. ©12019/Pixabay

Investigators looking into allegations that Crown Resorts facilitated money laundering have been bewildered by the major lack of oversight shown by the Victoria casino regulator. The agency is charged to maintain the quality and integrity of the constituent sportsbooks, and yet missed several clear indicators over a three-year period. Even after Crown Resorts staff were arrested and imprisoned in China for illegally advertising casino products the regulator took no action against the casino.

The Victorian Commission for Gambling Regulation released a damning self-assessment of its failure to properly deal with the situation, which has been unfolding in a dynamic fashion since 2017. Critics of the regulator have been sharp in their language used to describe the ineptitude – accusing them of being under the influence of Crown, corrupt, and “worse than useless”.

As a regulator of one of the world’s largest gambling markets, there is a lot of pressure to maintain a high standard. When things are going smoothly, as is usually the case, a lot of the inefficiencies inside an organization are shielded from scrutiny. A lot of attention has been directed at the Victoria casino regulator over the past year, and now investigators are getting to the final stages of their investigatory conclusions.

No Interviews of Crown Individuals who were Arrested in China

Staff working for the Victoria casino regulator only attempted to interview the arrested Crown Resorts staff in 2019. The delayed action of nearly 2 years had been highlighted by local news media outlets who were stunned at the inaction from the regulator. Spurred on by a scathing Nine Entertainment investigation into the issues, the Victorian Commission for Gambling Regulation finally began acknowledging their misjudgment.

The regulator is responsible for enforcing the terms of its operating license across all7 gambling operators in the state. This catchment includes the Crown Resorts location at Melbourne, which inside had the Suncity junket operator running money laundering schemes and other nefarious activities at the behest of organized crime gangs.

When Nine Entertainment’s 60 Minutes investigative report into the financial crimes at Crown aired in 2019, it was also revealed that the Victoria regulator had not taken any action. 19 staff were arrested for illegally promoting gambling in China. Shortly after the documentary-style report aired, the Victoria casino regulator jumped into gear and claimed they were in the final stages of its own investigation.

Furthermore, the annual report released by the Victoria casino regulator reveals that it failed to implement the recommendations made by an independent audit of Crown. The auditor itself stated that the Victoria casino regulator has grounds to investigated systemic subversion of the states’ gambling laws at Crown.

The scale of the incompetence exercised by the Victoria casino regulator is quite concerning. Considering the fact that the independent auditor of Crown Resorts made 13 recommendations of actions that should be taken, and in 2020 only 5 have been implemented. The recommendations of the auditor included new monitoring processes at deposit cashiers in the casino, and redefining the key risk areas that the casino and its regulators should be aware of.

Transparency and Willingness to Collaborate

The Victoria casino regulator has been quick to blame Crown Resorts’ lack of transparency and refusal to collaborate with the investigation as the reason for its slow progress. These claims are refuted by Crown, they waived their own right to legal professional privilege and provided large quantities of documents to the investigating committee. However, the regulator says this action came way too late, and it took many months of legal and public scrutiny for the casino to collaborate with the investigators.  

It is understandable to some extent that the casino regulator would need a lot of time to process the huge volume of documentation but the fact remains the regulator was painfully slow to recognize the need to act fast. They have also sought to utilize other sources of information in order to build a fuller picture of the financial irregularities at Crown.

The investigative committee working at the Victoria casino regulator has also consulted with Austrac, the financial crime intelligence agency that specializes in a broad range of problems related to this case. This collaboration is designed to help Crown Resorts implement much tighter controls over tracing funds and arranging for effective oversight between junket operators and premium players.

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