Australia's anti-money laundering agency has launched a formal investigation into Crown Resorts, which also revealed top executive Barry Felstead has been made redundant.
Australia's anti-money laundering agency has launched a formal investigation into Crown Resorts, which has also revealed that top executive Barry Felstead has been made redundant.
Crown told the ASX this morning that AUSTRAC has identified potential non-compliance by Crown Melbourne Ltd.
“The potential non-compliance includes concerns in relation to ongoing customer due diligence, and adopting, maintaining and complying with an anti-money laundering/counter-terrorism financing program,” Crown stated.
“These concerns were identified in the course of a compliance assessment that commenced in September 2019 and focused on Crown Melbourne’s management of customers identified as high risk and politically exposed persons.”
The AUSTRAC investigation comes in the midst of shocking revelations at an inquiry by the NSW Independent Liquor and Gaming Authority, which is assessing Crown’s suitability to hold a licence for its new Barangaroo casino.
The NSW inquiry has revealed a wide range of governance and regulatory issues at Crown.
It has also delved into alleged money laundering by high roller VIPs who were brought in to Australia to gamble at Crown’s casinos by private junket operators, some of whom have been associated with Asian organised crime.
The AUSTRAC move comes one week after the Victorian Commission for Gambling and Liquor Regulation issued a show cause notice to Crown Melbourne Ltd.
The notice requires Crown to show why disciplinary action should not be taken in relation to alleged non-compliance with its internal controls for junket operations.
In hearings of the NSW inquiry on Friday, Crown chair Helen Coonan acknowledged the group needed to improve its review processes.
“I don’t think our junket processes were robust enough,” she said.
“I think they were extensive.
“And ... our money laundering processes, by definition, aren’t comprehensive, because we’re doing a lot more things.”
Ms Coonan said a particular deficiency was the failure to cast the net widely enough to people associated with junkets, such as affiliates.
In response to questioning, she said the final decision-makers with respect of whether a junket operator relationship should commence or continue were two Perth-based executives – Barry Felstead and Joshua Preston.
Mr Felstead was chief executive Australian Resorts and was the executive with ultimate responsibility for VIP international, while Mr Preston is chief legal officer.
Counsel for the inquiry explained that responsibility also rested with Michael Johnston, who was a non-executive director of Crown and finance director of Consolidated Press Holdings – the private company of Crown’s major shareholder, James Packer.
Counsel asked Ms Coonan whether she still had confidence in Mr Felstead occupying a senior executive position.
“Well, I have to tell you that Mr Felstead’s current position is now redundant,” Ms Coonan replied.
“Mr Felstead was getting very near to wishing to retire,” she added.
“I think recent events have escalated his desire to do that. And he will part with the company about the end of the year, on my understanding.
“Arrangements and agreement has been reached with Mr Felstead.”
Crown has previously disclosed that it has suspended all activity with junket operators until June 2021 while it undertakes a review of its processes.
It is also seeking to fill the newly created role of head of compliance and financial crimes, which will report directly to the board.
Crown’s share price fell 8.3 per cent today to $8.24 after hitting a low of $8.06 early in the day.
Investor support for Crown's current board will be tested later this week when the company holds its annual general meeting.
Three directors - Jane Halton, John Horvath and Guy Jalland - are facing re-election.
WA’s gaming regulator has told Business News it is monitoring developments at Crown.
“The Gaming and Wagering Commission of WA is engaged in the current NSW inquiry involving Crown Casino and is also aware of the show cause notice recently issued to Crown Melbourne by the Victorian regulator,” a spokesperson said.
“The Commission will consider its position in relation to Crown Perth once the findings of the NSW inquiry have been handed down.”
The spokesperson added that the Gaming and Wagering Commission of WA has not been contacted by AUSTRAC and confines its activities to monitoring operations at Crown Perth.
