If there is one thing we have learnt from the licensing and suitability woes hovering over Australia’s Crown Resorts right now, it’s the importance of compliance and keeping scrupulously close watch over the flow of funds in and around the casino floor (and in pubs and clubs across the state).
But it has also reinforced the fact that gambling-related companies are often held to a different, higher standard than many others that are just as vulnerable to exploitation by those seeking to subvert the law.
Without going into too much detail about Crown’s situation – there just isn’t enough scope in this editorial to fully cover the exhaustive events of the past few years – the company was, at time of writing, awaiting the results of an inquiry, comprising both public and private hearings, by the NSW state government into its suitability to hold a NSW casino license for its US$1.6 billion Crown Sydney development.
The inquiry had initially planned to focus heavily on issues around the acquisition of a 19.99% stake in Crown Resorts by Macau casino operator Melco Resorts & Entertainment. But, when that deal was called off, it instead turned its attention to allegations of potential money laundering at Crown Melbourne by some of its Asian junket partners.
Although there was never any concrete evidence put forward confirming that funds flowing through these rooms were definitely dirty – nor have there been any prosecutions of such matters – it was found that senior management had been unaware of large cash deposits and transfers being made inside Crown Resorts junket rooms. It was also suggested that money had “probably” been laundered through certain Crown group bank accounts.
That evidence led presiding Commissioner Patricia Bergin to quite reasonably describe Crown’s internal AML controls as a “debacle” while questioning how the Victorian gaming regulator was supposed to keep track of happenings within Crown Melbourne’s walls if its own management didn’t know.
Commissioner Bergin is due to hand down her final report following the inquiry any time now, and it remains to be seen how heavy handed her finding and recommendations are when it comes to ensuring Crown whips itself into shape. But the worst-case scenario for Crown is about as ugly as it comes for a major casino company – loss of its NSW casino license and the potential for similar action in Melbourne and Perth, where regulators have already announced their own investigations. It would be a crushingly heavy price to pay.
Now compare that to another recent case in Australia where nine Australian financial institutions were found to have facilitated the laundering of AU$500 million by South American drug cartels. In this instance, Australian law enforcement declared concrete proof that these funds had been laundered directly from the cartels, but the story quickly disappeared from the headlines with no mention of any direct punishment besetting any of the financial institutions in question. Nor, for that matter, has there been any speculation over their suitability to retain their authorized deposit-taking institution (banking) licenses, issued by the Australian Prudential Regulation Authority (APRA).
Meanwhile, Crown faces the prospect of losing licenses worth billions of dollars on the assumption that an amount said to be vastly smaller in nature was “probably” laundered via its bank accounts.
Were it not for the fact that Crown is no position right now to be asking questions, the reality is that there are many questions that should be raised. Why, for example, is there a commission into money laundering risks at Crown without Australia’s AML authority AUSTRAC having even made any adverse findings around the company? Why are the states leading the way into this matter rather than AUSTRAC? And why did this inquiry continue unabated when the primary target of its interest – Melco’s acquisition of a 19.99% stake in Crown – backed out of the deal entirely?
By its own admission, Crown has failed to live up to the standards expected of it by both the public and its own stakeholders. But when it comes to such matters of law, it seems one punishment does not fit all.