Over claimed AML shortcomings at Crown, Austrac starts legal procedures.

Under claims of "serious and systemic" anti-money laundering and counter-terrorism financing (AML/CTF) failings, the government-operated national financial intelligence agency Australian Transaction Reports and Analysis Centre (Austrac) has started civil penalty proceedings against Crown Resorts.

Legal action follows compliance work with the casino sector, which Austrac claimed resulted in several comprehensive enforcement investigations including into compliance of the Crown Melbourne and Crown Perth sites.

According to Austrac's claims, the two properties neglected to properly evaluate the money laundering and terrorism financing risks they encountered, including the probability and effect of those risks, as well as to spot and react to changes in risk over time.

Furthermore absent from their AML/CTF initiatives were suitable risk-based procedures and controls meant to reduce and control Crown's risks. Crown Melbourne and Crown Perth

Austrac also said the properties lacked a transaction monitoring system to assist in the identification of risk-based or suitable for the type, scale and complexity of Crown suspicious activity, nor did they provide an appropriate framework for board and top management oversight of the AML/CTF programs.

Other claimed shortcomings included the properties lacked a suitable enhanced customer due diligence program to perform extra checks on higher risk clients, nor did they conduct suitable continuous customer due diligence on players who presented greater money laundering risk.

"Austrac's investigation identified poor governance, risk management and failures to have and maintain a compliant AML/CTF programme detailing how Crown would identify, mitigate and manage the risk of their products and services being used for money laundering or terrorism financing," chief executive Nicole Rose said.

"They also neglected to perform suitable continuous customer due diligence, covering some very high-risk clients among others. Over a period of years, this resulted in extensive and major non-compliance.

"Austrac has taken this aggressive measure to create enduring reform and ensure that Crown will properly perform its responsibility to protect Australia's financial system from illegal activity.”

Rose further mentioned the lack of suitable controls and procedures meant Crown was unable to properly handle high risk consumers, which in turn permitted the flow of money in opaque ways, therefore exposing Crown to criminal exploitation.

"This is a crucial reminder to all Australian casinos that they have to have a strong anti-money laundering system in place to safeguard their business and the community from significant and organised crime," Rose advised.

Whether a civil penalty order is issued, and what this could mean, are issues for the court; Austrac said it would not offer additional comment on the action or details presented in the court documents since the matter is before the court.

Responding to the matter, Crown claimed it had created a thorough remedial plan meant to establish the business as a "leader" in the sector in the approach to governance, compliance, responsible gaming, and management of financial crime risk.

Among these initiatives were a new control system to control financial crime risk and a revamped Joint AML/CTF programme, so establishing a thorough Financial Crime and Compliance Change Program.

Along with strengthening its Financial Crime and Compliance resourcing and capacity, other activities included adding better controls to stop and identify money laundering through Crown's bank accounts and lowered restrictions for cash deposits at its casinos.

While a forensic audit and controls assessment of Crown's patron bank accounts was conducted by an independent consultant, Crown also noted it had invested in automation, specifically a new automated transaction monitoring system and digitised tool to allow electronic submission and investigation of unusual activity reports.

"An elevated organisational culture forms the basis of the plan," Crown stated. "Crown has changed its attitude to managing financial crime risk and acknowledges the need of following its financial crime obligations."

Rose praised these initiatives, saying: "Crown is taking steps towards improving its systems, processes and resourcing however there is further work to do and Austrac will continue to work closely with Crown to address ongoing compliance concerns."

Crown has now run across several regulatory problems. Following an inquiry by the state's Royal Commission, Crown was declared to be "unsuitable" in October last year for running Crown Melbourne in Victoria.

Although Crown was advised to follow special measures including 33 suggestions issued by the Commission, it did not lose its licence because of the possible economic consequences for Victoria.

Launched in August 2019, the Bergin Inquiry in New South Wales set off this probe.

The investigation determined Crown's eligibility for a Sydney casino licence, then decided it was "unsuitable". Still, it argued, it might be allowed to run the casino after implementing its changes.

Austrac added meantime that enforcement enquiries into Sky City Adelaide and the Star Entertainment, revealed in June of last year, are still ongoing. Along with Crown, Star and SkyCity got notice of the charges; Austrac also informed the National Bank of Australia (NAB).

Austrac noted at the time the matter was to "serious non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Anti-Money Laundering and Counter-terrorism Financing Rules Instrument 2007 (AML/CTF Rules).