Probe On Casinos Expanded By Australian Financial Crime Watchdog

Amid the casino industry in Australia struggling with the Covid-19 pandemic and heightened regulatory scrutiny, the anti-money-laundering agency of the country expanded a probe into due diligence at casinos which includes the three biggest operators of the industry and increasing pressure on the operators.

The Australian Transaction Reports and Analysis Centre said that it was probing into potential breaches of background check rules at rival Star Entertainment Group and New Zealand’s SkyCity Entertainment Group after having initiated an investigation into the top player of the industry Crown Resorts a few months ago.

The expansion of the probe now means that casino owners and operators in the five most populous cities of Australia could now be faced with the enforcement investigations which could result in fines or restriction of their licenses.

An investigation this year into the operations of a just-opened A$2.2 billion ($1.7 billion) Sydney casino of Crown found that it the unit was unfit for a licence which has put the company under intense pressure. Following this step, there were royal commissions started in two other states while also resulting in class-action lawsuits and a probe by the AUSTRAC that was broadened to include the Perth city resort of the company.

“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. This was followed by disclosure of the investigations by the casino operators in their 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.

The investigation was later confirmed by AUSTRAC as well as a separate investigation of No. 3 lender National Australia Bank Ltd. The agency however did not make any further comments.

The concern of the AUSTRAC was with the management of the casinos of “customers identified as high risk and politically exposed persons”, all three casino companies said. The casinos further added that the agency had not yet decided whether to take enforcement action and added that they would cooperate with the investigations. 

At the same time however, a A$9 billion buyout by Star of larger rival Crown could get complicated with the former 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.”

The widening of the investigation was “obviously not good news for the embattled casinos, and we expect fines to be the most likely outcome”, said Angus Hewitt, an analyst at Morningstar.

(Adapted from

Categories: Economy & Finance, Regulations & Legal, Strategy, Uncategorized

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