Australian Financial Crime Watchdog Widens Probe on Casinos Already Reeling From Covid

By Byron Kaye

Months into an investigation of top player Crown Resorts, the Australian Transaction Reports and Analysis Centre (AUSTRAC) said it was formally looking into possible breaches of background check rules at rival Star Entertainment Group and New Zealand’s SkyCity Entertainment Group.

That means owners of casinos in Australia’s five most populous cities now face enforcement investigations that could carry fines or restrict their licences.

Crown already has been under intense pressure after an inquiry this year found it unfit for a licence at a just-opened A$2.2 billion Sydney casino, sparking royal commissions in two other states and fueling class-action lawsuits, as well as an AUSTRAC probe that was expanded to its Perth city resort on Monday.

“The Australian casino sector is at risk of criminal misuse due to the products and services they offer,” AUSTRAC CEO Nicole Rose wrote in an editorial published in The Australian newspaper hours before the casino operators disclosed the investigations in market filings.

“We have an enforcement investigation under way at Crown casino that demonstrates the seriousness of our concerns. And we also have significant compliance work under way on the casino sector,” Rose wrote.

AUSTRAC later confirmed the investigations – plus a separate investigation of No. 3 lender National Australia Bank Ltd – without commenting further.

All three casino companies said AUSTRAC was concerned with their management of “customers identified as high risk and politically exposed persons”, that the agency had not decided whether to take enforcement action, and that they would cooperate fully.

The crackdown may meanwhile complicate a A$9 billion buyout by Star of larger rival Crown, which has been fielding takeover approaches.

“If it’s found to be a systematic and ongoing lackadaisical attitude to enforcement then (a regulator objection) seems likely,” said Nathan Bell, portfolio manager of Intelligent Investor, which has Crown shares.

“If Star is seen to have good standards and there is a genuine effort to weed out these people then … the regulators would rather Crown was kept in Australian hands and Star’s takeover proposal would remain live.”

Crown shares were down 1.5% in a flat overall market and Star shares were down 3%. SkyCity’s New Zealand-listed shares did not trade because of a public holiday.

In a separate development, Crown said it had received legal advice that it had contravened casino laws by selling over A$160 million of gambling chips to people paying with credit or debit cards from 2012 to 2016 – potentially sparking yet another investigation.

($1 = 1.2915 Australian dollars)

(Reporting by Byron Kaye; editing by Diane Craft, Stephen Coates and Gerry Doyle)