- »AUSTRAC Says Casino Junkets Cannot Be Regulated
AUSTRAC Says Casino Junkets Cannot Be Regulated
When a regulator testifies that it cannot regulate one of the most significant risks regarding money laundering in a country, it is significant. That is what happened recently when AUSTRAC told the government that it cannot regulate casino junkets.
The onus to regulate junkets is on the casinos.
On December 4, the Australian Transaction Reports and Analysis Centre (AUSTRAC) appeared before the Senate to answer questions about casino junkets. The top brass at the agency needed to respond to lawmakers’ questions about money laundering risks.
AUSTRAC Chief Executive Officer Nicole Rose told the Senate that casino junkets continue to be a danger with regard to money laundering. However, individual gaming companies would need to research and assess the junkets to determine if they are and will be compliant with Australian laws. Rose said that the anti-money laundering and counter-terrorism financing laws are clear enough, even without updated regulations attached, for the casinos to manage.
Per the Australian, Rose noted that the gambling industry is “well placed” to handle junket issues and determinations. “The onus is on industry to ensure it complies with its AML/CTF obligations. The Federal Court has also reiterated this view.”
Lawmakers like Labor Senator Kristina Keneally raised questions about the “massive gap” in the current regulations. Rose responded that Australian regulations, no matter how stringent, won’t address all of the issues because junkets operate outside of Australia and, on the whole, may not comply.
What solution might work?
Rose said individual gaming bodies in each state should implement licensing frameworks for junket operators. This would involve state regulators to license and monitor the junket business, overseeing that part of the casino industry.
Doubts About Casino Compliance
The subject has concerned Parliament for years, but it became more of a focus in the past several years. Junkets are integral to casino operators’ success but pose a significant money laundering risk.
Specifically, the stunning exposé in July 2019 by a coalition of media outlets revealed many oversights by Crown Resorts. And this year’s testimony in the New South Wales Independent Liquor and Gaming Authority inquiry shone a spotlight on the scope of those oversights.
Media reports and investigations accused Crown of ignoring criminal ties and money laundering facilitated by junket operators. Some of those junket operators also maintained ties to drug and human trafficking rings, none of which Crown flagged.
Worse, during the inquiry testimony in NSW, Crown CEO Ken Barton admitted that he was not aware that Suncity junkets accepted cash deposits until the media revelations in 2019. He also didn’t seem to know much about the money laundering loopholes in the company’s policies.
Those statements prompted Commissioner Patricia Bergin to express shock at the “debacle levels” of unawareness. She called it “extraordinarily troubling.”
These revelations gave lawmakers pause regarding casino oversight of junket operators, as the largest casino operator in the region was not able to handle the task to date.
The regulator has long washed its hands of oversight responsibilities with regard to junkets.
Previous statements to the Senate delivered admissions from AUSTRAC that it was aware of the casinos’ inability to regulate junkets. The regulator had long been aware – as noted in a 2017 report – that casinos did not take money laundering worries seriously. Further, AUSTRAC admitted that the relationship between junket operators and casinos were especially “vulnerable to exploitation for money laundering purposes.”
That AUSTRAC report explained that it had been unable to determine the source or extent of money laundering regarding junkets. Rose responded to that by saying that junkets are based in other countries and often provide limited information.
Interestingly, AUSTRAC has shown its inability to obtain proper information to assess the depths of junket-related money laundering. However, it expects smaller, state-based regulators to be able to do it through a licensing process.
While licensing will require junket operators to provide more information than they do currently, states would likely experience similar difficulties in verifying information and ensuring continuous compliance with Australian regulations.
AUSTRAC and some state governments have spent years putting the onus for junket oversight on each other, all while casinos clearly didn’t do their own due diligence.
It seems that lawmakers on the national level see the finger pointing and are serious about finding a way to bridge the many gaps that currently exist. The Crown inquiry brought these issues into the light, and lawmakers must now figure out how to keep the light on and fix what it shows.