Crown Resorts Announces Money Laundering Investigation by Australian Authorities

Posted on: October 18, 2020, 08:44h. 

Last updated on: October 18, 2020, 09:15h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

Crown Resorts Limited announced Monday morning (Sunday night, ET) that Australian authorities are investigating the gaming company’s Melbourne casino for potential violations of money laundering and other laws.

Crown Melbourne investigation
Crown Reorts Limited announced Monday morning (Sunday night ET) that AUSTRAC has started a money-laundering investigation after finding “potential non-compliance” at the Crown Melbourne resort casino. (Image: VisitMelbourne.com)

The Australian-based gaming company made the revelation in a statement to the Australian Securities Exchange after AUSTRAC informed the company that it “identified potential non-compliance” by Crown Melbourne regarding the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Anti-Money Laundering and Counter-Terrorism Financing Rules 2007.

AUSTRAC is the country’s federal agency responsible for investigating financial crimes.

Crown said the investigation focuses on concerns about “ongoing customer due diligence” and the way the Melbourne resort handles patrons identified as “high risk and politically exposed.” It stems from a compliance assessment that started in September 2019.

Crown Melbourne will respond to all information requests in support of the investigation and fully co-operate with AUSTRAC in relation to this process,” the company said in its statement.

The company is one of Australia’s leading entertainment and gaming enterprises. In addition to the Melbourne resort, it also owns Crown Perth and is preparing to open a casino resort in Sydney. The license for that multi-billion dollar development was the subject of a three-day suitability hearing that ended last week.

That hearing, conducted by the New South Wales Independent Liquor and Gaming Authority, also delved into concerns about money laundering activities, as well as ties to organized crime.

In an effort to salvage the Sydney license, Crown officials announced last week that it would cease working with junket operators who bring in high-money Chinese gamblers through next June.

Crown General Meeting Set for This Week

The AUSTRAC investigation is just the latest bout of bad news for the gaming company, and it comes as Crown plans to hold its annual meeting later this week.

Critics of the company’s management have targeted the upcoming meeting and recommended to shareholders that they vote out three board members.

The Australian Council of Superannuation Investors, which provides advice to pension funds based in the country, has called on Jane Halton, John Horvath, and Guy Jalland to be removed, and other long-term board members should be thinking about their position on the board.

The concerns about the company’s management were also spotlighted in a documentary that aired a year ago. That report showed footage of a junket operator helming a cash desk at the Melbourne casino.

Ken Barton, Crown’s CEO and one-time CFO, acknowledged he only learned of the cash desk by watching the documentary.

Crown Stock Takes Hit

The news of the investigation sent Crown’s stock on the ASX tumbling in trading Monday.

By 2 pm local time in Sydney (11 pm Sunday ET), the stock was down nearly 9 percent to AUD 8.19 (US $5.81).

Like other gaming stocks, Crown had a precipitous fall due to the COVID-19 crisis that shut down casinos. It lost about half its value in a month, as the stock traded as low as AUD 5.84 in mid-March.

The stock rebounded to nearly AUD 11 in early June, but has since fallen gradually.