Australia’s casinos seen to have failed to prevent money laundering

Posted under Info On By Alan Butler

Australian gambling headlines read like a police blotter from a film noir this week with Crown being found unsuitable to hold a casino license but allowed to continue operating anyway and Star admitting to activity at Suncity being “problematic” at least in 2018 with regards to AMLCTF (anti-money laundering, counter-terrorism financing) laws.

The Guardian is reporting that Crown Resorts will be able to keep a license in Western Australia although a royal commission has found it unfit to run its Perth casino at Burswood. The downfall related to “facilitating” money laundering at Crown Perth is found in the final report by a royal commission which was made public by the government today.

Helpful Definitions:

  • Junket – Casino Junkets are complimentary travel trips and are offered to casino players who spend a lot of time (money) playing in a casino.
  • Triad – A triad is a secret Chinese criminal organization.
  • Money Laundering – Money laundering refers to a financial transaction scheme that aims to conceal the identity, source, and destination of illicitly-obtained money.

Triad-linked Junkets Alleged to Have Laundered Money

The three-member commission determined that the operators failed to detect suspicious transactions as there was no viable system to do so. They also found that junkets with links to criminal enterprises were allowed to operate from the casino. Beyond those findings, it was also determined the casino was not transparent and accountable to regulators and that it failed to minimize potential harms to customers related to electronic gambling machines.

The findings are similar to those already brought to light in Victoria and New South Wales where Crown also has casinos that have come under increased scrutiny over the last couple of years.

Commissioner Neville Owen led the inquiry that resulted in a nearly 1,000-page report filed with Western Australia Parliament on Thursday.

While Crown has been taking steps to address its failing, it is at an early stage of the journey to comprehensively reform the harm minimization,” the report said.

In a statement filed with the ASX, Crown management stated it would work with the government to address any recommendations. However, the commission doesn’t expect Crown to fix all of its remaining problems in a vacuum, and the list of 59 recommendations the commission tabled include action items for the government and the regulator as well.

An independent monitor will be appointed to oversee progress and will provide a report to regulators after two-year’s time.

One reason the license was not revoked, according to WA racing and gaming minister, Tony Buti was to provide job security for some 5,000 existing employees.

Crown Resorts is controlled by billionaire James Packer. The operator said in early February it had accepted Blackstone Group’s A$8.9 billion ($6.3 billion) takeover offer. Buti said the sale did not influence the recommendations.

Star Under Fire

According to a report by ABC Australia, Sydney’s Star casino at Pyrmont allowed at least one gambling whale to spend $11m in one day using a Chinese debit card. Under an agreement between the bank and casino, China UnionPay bank’s debit cards were only authorized for use at the property for non-gambling-related expenses.

The high roller in question is an Australian citizen who was born in China but still speaks Mandarin, refusing to speak in English if he is able to, and has lived in NSW for more than 20 years. He told the commission that he can neither read nor speak English – Philip Dong Fang Lee.

The day Mr. Lee charged $11m to his card was the same day his cash checking limit had changed by that same amount from $12.3 million to $23.3 million. Lee also ran his card for nearly $1m per transaction several times in close proximity to each other, according to questions posed by investigators and answered by Lee through a translator.

In another article at ABC.net.au, an alleged operative of infamous Macau junket operator and Hong Kong-listed Suncity Group Holdings Ltd can be seen on CCTV handing a gambler a plain paper bag which the gambler proceeds to stuff with bundles of $50 notes.

Angus Buchanan, Star’s due diligence manager was asked by Commissioner Adam Bell SC: “Was one of your concerns that from the evidence you’d seen it appeared at least on occasions in 2018 an organization with links to the Triads had been running a casino within a casino?”

Buchanan replied: “I agree that was my concern, that was evident from the footage we viewed earlier and the documentation I’d read.”

In light of what appears to have been large-scale money laundering, Star issued a warning letter to Suncity after an internal investigation revealed that the junket was storing large amounts of cash notes inside of sports bags just outside its gaming salon. Suncity staff frequently exchanged chips for cash. Exchanging cash for chips and operating a casino cage (the retention of cash for players at the service desk) were both activities prohibited by the arrangement.

Counsel assisting Naomi Sharp SC asked Buchanan: “Shouldn’t this whole arrangement have been stopped at the point that we saw those incidents on the CCTV footage in the view of the fact (Star’s general counsel) Mr. White had directed the salon not operate a cage?”

Buchanan replied: “That’s correct, I agree.”

A full 12% of Star Entertainment’s gross revenue in 2019 was derived from junkets.

Source: Source: Crown Resorts found unfit to run casino in Western Australia but will not lose licence, The Guardian, March 24, 2022