AUSTRAC Report: Australian Crime Watchdog Aware of Junket Risks

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Australian crime watchdog aware of junket risks

Australia’s financial crimes watchdog has said it is powerless to stop casinos using junket operators and tainted funds from entering Australia.

The admission comes as a 2017 AUSTRAC report revealed the regulator was aware Asian junket operators used by a swatch of casinos to bring in high-roller VIP players from overseas were a major money laundering and terrorism financing hazard due to the lack of visibility around where funds were being sourced from.

News.com.au reports that the report said neither AUSTRAC, nor the casino is privy to the agreement made between the junket tourism operator and the participant or any third parties.

“It is AUSTRAC’s view that the obscurity of the relationship between the junket tour operator and participant is vulnerable to exploitation for money-laundering purposes.

The report also noted casinos appeared to underestimate and not take seriously money-laundering risks associated with overseas junkets.

The report, tabled to the Senate, coincides with a New South Wales Independent Liquor and Gaming Authority probe into Crown Resorts to determine if the casino giant should retain its gaming licence for its Sydney Barangaroo development, scheduled to open in December.

The ILGA inquiry has heard evidence that Crown’s major junket partner Suncity was linked to organised crime syndicates and allegedly laundered money through Crown’s Melbourne and Perth casinos.

In 2017, AUSTRAC said Australian casino junket operations were “broadly” compliant with anti-money laundering and counter-terrorism financing laws.

In October, the regulator launched formal investigations into Crown for alleged breaches of Australian anti-money laundering laws, following a failed compliance check in September 2019.

AUSTRAC chief executive Nicole Rose has previously said the regulator’s 2017 junket compliance assessment was “aged” and “not correct”.

“I’m told the risk assessment has now aged and is not correct,” Ms Rose told Senate Estimates in October when handed a heavily redacted version of the report.

“The issue with junkets…is that they are hosted offshore, and there are challenges with the legislation with us being able to regulate junket operators.”

Its reports detailed the regulator was unable to determine the ultimate source of the gambled funds or able to verify where winnings were distributed after settlement with the junket operator.

AUSTRAC also noted state-based gaming regulations were limited in being able to mitigate money-laundering risks through junkets and casinos relied on the Department of Immigation and Border Protection for due diligence checks.

Fitch downgrades Crown’s rating as controversy plagues casino operator

Crown Resorts has been placed on negative watch by Fitch rating agency after a fortnight of controversy and a combative AGM, amid a New South Wales government inquiry into the operators’ suitability to hold a casino licence in New South Wales.

In October, Fitch revised the outlook on Crown to negative from stable following the announcement that two more regulatory inquiries have been opened into its operations and compliance with regulations, including anti-money laundering provisions have been called into question.

The negative outlook reflects weaknesses in Crown’s governance structure that were revealed during an inquiry in New South Wales, as well as the risks to Crown’s operations and financial profile from potential outcomes of the various inquiries, which could include fines, changes in operating conditions and regulations, or changes to or loss of licences.

Fitch would consider downgrading Crown’s rating should the regulators impose onerous regulatory conditions or fines or penalties that have a significant impact on the company’s business or financial profile, it said.

Crown would be able to absorb around A$800 million in fines or penalties such that its financial profile remained consistent with its rating.

If this were to materialise, Fitch said it would be among the largest fines imposed on a corporate in Australia.

Alternatively, the most severe regulatory action would be loss of licence, which Fitch believes to be a low probability event and hence have captured the risks under the negative outlook.

William Brown

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