GGRAsia – Crown Resorts, AUSTRAC agree on US$294mln fine over AML

Crown Resorts, AUSTRAC agree on US$294mln fine over AML

May 30, 2023 Newsdesk Latest News, Top of the deck, World

Australian casino operator Crown Resorts Ltd says it has agreed to pay a fine of AUD450 million (US$293.5 million) as part of a deal with the country’s financial watchdog to “resolve civil penalty proceedings relating to historical non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws at Crown Melbourne and Crown Perth” casinos.

Among the agreed facts and admissions are matters said to have involved Macau-based junkets, and matters related to overseas deposit services provided to Crown Resorts customers at City of Dreams Macau up to October 2016, and at City of Dreams Manila up to May 2017. The latter two are casino resorts operated by Nasdaq-listed Melco Resorts and Entertainment Ltd.

That information was in a statement issued jointly on Tuesday by the Australian Transaction Reports and Analysis Centre (AUSTRAC) and Crown Resorts. The deal is subject to federal court approval, the casino operator said in its own Tuesday announcement.

“It is expected that the court consider the proposed settlement, including the proposed penalty, at a hearing on July 10 and 11,” Crown Resorts stated.

The firm’s release quoted Crown Resorts chief executive Ciarán Carruthers as asserting that “the company that committed these unacceptable, historic breaches is far removed from the company that exists today”.

He added: “The Crown of today is committed to harm minimisation and becoming the world leader in the delivery of safe gambling and entertainment.”

Crown Resorts was acquired in June last year by private investment firm Blackstone Inc for US$6.15 billion. It was previously controlled by Australian entrepreneur James Packer.

Mr Carruthers, former chief operating officer of the Wynn Macau casino property in Macau, run by Wynn Macau Ltd, took over in September as the new chief executive of Crown Resorts.

In his Tuesday comments, the executive noted that, since October 2020, Crown Resorts had introduced a series of measures to strengthen its systems and processes in regulatory compliance. They included “investing more than AUD40 million” to bolster its financial crime compliance, “with further significant investment committed for future financial years”.

The casino operator had also expanded its financial crime and compliance team by adding approximately 170 people, “including professionals from the banking sector, other gaming organisations, regulators, and law enforcement agencies, in Australia and internationally.”

The firm had been fined in other inquiries last year by Australian authorities, for failure to meet anti-money laundering and counter-terrorism financing rules. The fine agreed with AUSTRAC takes Crown Resorts’ total penalties in this regard to AUD680 million.

Macau link

According to the statement of agreed facts and admissions signed between Crown Resorts and AUSTRAC, the casino operator admitted that the provision of gaming-related services through junkets involved “higher money laundering and terrorism financing risks than services provided through other channels”.

The document said that between March 2016 and March 2020, the Crown Melbourne property (pictured in a file photo) and Crown Perth venue facilitated junket programmes for high-profile Macau-based junket brands, including Suncity, Meg-Star and Guangdong Group. The report featured details about a number of “high risk” situations and AML/CTF failures involving these brands and clients served by them.

The statement of agreed facts and admissions also noted that “Crown Melbourne and Crown Perth provided overseas deposit services to customers through the City of Dreams casino in Macau from approximately 2009 until October 2016, and in Manila from December 2014 until May 2017.”

It added: “A mutual customer of any Crown casino and one of the City of Dreams properties could deposit funds at a City of Dreams cage in various forms, including by way of cash, chips… and foreign currency. Crown Melbourne and Crown Perth relied on City of Dreams Macau and City of Dreams Manila to conduct identification checks on the person depositing the funds. No source of funds checks were applied by Crown Melbourne or Crown Perth on deposits via the City of Dreams deposit services.”

“Crown does not know whether City of Dreams Macau or City of Dreams Manila undertook any source of funds checks on depositors at the cage,” said the statement.

The Melco casino brand was established in 2004 as a joint venture between Hong Kong-listed Melco International Development Ltd – a company controlled by Lawrence Ho Yau Lung – and a firm that eventually became Crown Resorts.

The combined venture was involved in developing several Macau casino resorts, including Crown Macau in Taipa – now known as Altira Macau, and which opened in 2007 – and City of Dreams Macau, on Cotai, which launched in 2009. City of Dreams Manila started operations in 2014.

At the start of May 2016, Crown Resorts – alongside Melco International – each held a stake of 34.3 percent in the joint venture. But in early May 2016, Crown Resorts said it was cutting its holding in the firm to 27.4 percent. Further sell downs by Crown Resorts occurred in the space of several months, with the Australian company selling its remaining stake in Melco Resorts in May 2017.