Casinos in line for AUSTRAC enforcement as watchdog teams up with big banks

by Noah Taylor Last Updated
Casinos in line for AUSTRAC enforcement as watchdog teams up with big banks

Casinos on notice after Australia’s financial watchdog announced it will team up with Australia’s big banks to fight financial crime at the nation’s casinos.

The Australian Financial Review reports that after extracting $2 million in fines from Australia’s big banks for breaching anti-money-laundering laws, the regulator has called the banks “valuable partners”, as it shifts the heat on to casinos.

AUSTRAC is looking to leverage an improved relationship with Australia’s major banks and hopes it will provide support to its operations.

AUSTRAC chief executive Nicole Rose said banks played an important role as service providers to other AUSTRAC-related entities and were able to provide “insight into other sectors” and “add value” to its operations.

The nimble but feared regulator is now shifting its attention from banks to the embattled sector, which will see casinos on notice.

“We’ve got concerns across the board with the sector, so yes, are we focusing on them at the moment/ Absolutely,” Ms Rose said.

Two weeks ago, Australia’s peak financial intelligence unit was revealed to be conducting simultaneous enforcement investigations of casinos on notice; Crown Casino, The Star Entertainment Group and SkyCity Entertainment.

The probes were launched following a compliance exercise codenamed Operation Slalom that found the anti-money-laundering and counter-terrorism (AML-CTF) programs of Australian casinos and their identification and treatment of politically exposed persons were not up to scratch.

Ms Rose said the termination of high-roller gambling junkets would reduce the risk casinos were being exploited by money launderers, but this was no silver bullet because there was a lack of visibility across the casino industry’s cash operations.

“There are a range of other things,” Ms Rose said.

“Casinos have always been at high risk for money laundering just because of the nature of their business. And that’s why we need them to be so vigilant.”

AUSTRAC escalates the case to the enforcement team

On the day the casino actions were made public, National Australia Bank revealed that AUSTRAC had escalated its case to the enforcement team.

NAB’s issues with its anti-money laundering program and know-your-customer obligations were first disclosed in 2017 and are understood to date as far back as an onsite visit in 2015.

Ms Rose said companies that prioritised good governance were typically compliant with AML-CTF obligations.

AUSTRAC was able to separate the companies that had a “genuine compliance culture” from those that “tick and flick because the regulator asked you to fill in a form.”

The board’s ability to engage with the details was another critical factor.

AUSTRAC chief commends companies championing anti-money laundering causes

Companies with directors who spoke to risk staff and understood challenges at the coal face were more compliant than companies where the closest a director would get to the problem was a biannual risk review.

“The ones that are doing a really good job have boards that have a good grasp of AML CTF.

“Previously, boards would not have known what AML CTF was. They are now talking about money laundering and counter terrorism and financial crime,” Ms Rose said.

She spoke highly of ANZ’s financial crime division, describing it as “champions” of the cause, while also commending Commonwealth Bank for turning around its approach following its $700 million settlement in 2018 for serious and systemic failures.

Ms Rose said the reason Australia was targeted by criminal organisations was because of the super profits they stood to make rather than any weakness in the regulatory architecture.

“There is a risk of money laundering in Australia because of the ability to make large profits from drugs,” she said.

“There is a high demand for recreational drugs in Australia and a high profit margin for recreational drugs in Australia and that profit needs to be laundered somewhere in the system.”

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