On 30 May 2023 the Australian Transaction Reports and Analysis Centre (AUSTRAC) and Crown Perth and Crown Melbourne (together, Crown) jointly proposed that Crown would pay an historic $450 million penalty. This proposed penalty is in respect of Crown’s admitted breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and has been more than a year in the making.
The AML/CTF Act and its associated rules aim to prevent money laundering and the financing of terrorism by imposing certain obligations on specified sectors and services.
These include the financial sector, gambling sector, remittance (money transfer) services, bullion dealers and other professionals or businesses (known as ‘reporting entities’) that provide particular services (known as ‘designated services’), including gaming services and financial services.1
The obligations imposed include collecting and verifying certain ‘know your customer’ information about a customer’s identity when providing those services.
Businesses that must comply with the AML/CTF Act must also comply with the Privacy Act 1988 (Cth) when handling personal information collected for the purposes of compliance with their AML/CTF Act obligations.
AUSTRAC is the Australian Government agency responsible for ensuring compliance with the AML/CTF Act, which plays a role in generating financial intelligence for law enforcement investigations.
The agency is “responsible for detecting, deterring and disrupting criminal abuse of the financial system to protect the community from serious and organised crime.” AUSTRAC also possesses enforcement powers and can take steps to both enforce compliance and seek a penalty.
Enforcement methods available to AUSTRAC include civil penalty orders, enforceable undertakings, infringement notices and remedial directions.
Another action AUSTRAC can take is issuing a written notice requiring a company to:
On 1 March 2022 AUSTRAC commenced Federal Court of Australia proceedings against Crown for alleged serious and systemic non-compliance with Australia’s AML/CTF laws. The alleged non-compliance related to breaches of section 36(1) (ongoing customer due diligence) and 81(1) (reporting entity to have an AML/CTF program) of the AML/CTF Act.
The proceedings followed the 2021 Royal Commissions into Crown and an independent investigation by AUSTRAC. AUSTRAC CEO Nicole Rose said Crown had failed to meet their respective AML/CTF obligations, making their business and Australia’s financial system vulnerable to criminal exploitation:
“AUSTRAC’s investigation identified poor governance, risk management and failures to have and maintain a compliant AML/CTF program detailing how Crown would identify, mitigate and manage the risk of their products and services being misused for money laundering or terrorism financing.
They also failed to carry out appropriate ongoing customer due diligence including on some very high risk customers. This led to widespread and serious non-compliance over a number of years.” 2
On 30 May 2023 the parties filed with the Federal Court joint submissions proposing that Crown pay a combined civil penalty of $450 million to the Commonwealth in relation to admitted breaches of the AML/CTF Act.
The statement of agreed facts and admissions also filed on 30 May 2023 identified the facts relevant to the contraventions admitted by Crown. In this, Crown admitted that they had contravened sections 36(1) and 81(a) of the AML/CTF Act, including that they:
Factors relevant to the proposed settlement amount included:
Crown accepted that because of Crown's non-compliance, the Australian and global community and financial system had been exposed to systemic ML/TF risks over many years. Crown also accepted that it is likely that many ML/TF risks were realised and that Crown was at risk of being exploited by organised crime.
His Honour Justice Michael Lee will consider the proposed settlement, including the proposed penalty, at the next court hearing on 10 and 11 July 2023.
Since 2015 AUSTRAC has only undertaken an enforcement action for civil penalty orders five times. Three of these actions have been against casinos: Star Pty Ltd (November 2022), SkyCity Adelaide Pty Ltd (December 2022) and Crown.
The Crown and AUSTRAC Agreement demonstrates the ability of AUSTRAC to use its enforcement powers rather than just its investigative powers.
If you face an investigation or enforcement action by AUSTRAC, Lavan’s Corporate Crime & Investigations Team is able to assist. Please contact Partner, Cinzia Donald, and Senior Associate, Stephanie Tan to discuss the matter.
1 See section 6 of the AML/CTF Act.