Australian Casinos Probed For Possible Anti-Money Laundering Law Breaches
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SYDNEY--Australia's two largest casino operators are facing fresh scrutiny from regulators after the government's financial intelligence agency uncovered potential breaches of anti-money laundering law.
Crown Resorts Ltd., which is already facing multiple investigations from Australian authorities amid disquiet over its business practices in Sydney and Melbourne, said the AUSTRAC agency had identified a potential breach at its casino in the west coast city of Perth.
The Star Entertainment Group Ltd. separately said AUSTRAC believed it may have seriously breached the law, including by failing due diligence obligations on high-risk and politically exposed customers.
AUSTRAC has referred both cases to its enforcement team, which can issue penalties including court-ordered fines. Westpac Banking Corp. last year agreed to a penalty of 1.3 billion Australian dollars (US$1.01 billion) for multiple breaches of anti-money laundering law, two years after Commonwealth Bank Ltd. was ordered to pay a A$700 million penalty for breaching the same legislation.
Crown did not detail the nature of the potential breach identified by AUSTRAC.
Star Entertainment, which last month proposed a merger with its competitor, said its potential non-compliance included concerns about its adoption and maintenance of an anti-money laundering program.
Star said the issues at its flagship casino occurred within the 2016 and 2019 financial years, which run between July and June. It said the issues were identified by an AUSTRAC compliance assessment, which started in September 2019 and focused on The Star Sydney's management of customers identified as high risk and politically exposed.
Annoucing the AUSTRAC inquiry, Crown said that its Melbourne complex, which is at the center of a quasi-judicial inquiry in Victoria state into the company's suitability to hold a casino license, also breached Victoria's Casino Control Act by allowing international gamblers to deposit funds with debit or credit cards.
Crown said it had informed the existing investigation of the breach, which happened between 2012 and 2016 and involved A$160 million of transactions. It is also looking at whether the breach may have flouted other laws or rules.
It is the latest regulatory issue at Crown, which withdrew from international operations after the arrest of its employees in China in late 2016. It sold off a stake in a Macau casino operator and pulled out of a Las Vegas casino project.
Last month Crown rejected an improved takeover offer from U.S. private-equity firm Blackstone Group Inc., saying the proposal undervalued the company and presented too much regulatory uncertainty. It also asked Star for more information on its merger proposal.
It has refocused in Australia, where it spent hundreds of millions of dollars building a new skyscraper on Sydney's waterfront with the intention of opening a new casino. The resort has been subject of a long-running approvals process by the gambling regulator in New South Wales state, which found that Crown disregarded the welfare of its employees by pursuing highrollers in China.
The NSW regulator last month imposed a range of conditions that could pave the way for it to open in Sydney, pending a final decision.
Write to Stuart Condie at stuart.condie@wsj.com
