Major casinos accused of money laundering in 2023

For the last few years Australian gambling industry has faced a number of difficulties. Besides the problems connected to COVID-19, there were some reports about junket operations, breaching laws, money-laundering in some Australian casinos.

They have managed to overcome many difficulties. Most gambling venues guarantee their players security, fast payouts. They now have contracts with many casino providers. But even in 2023, the issue of money-laundering remains. Major players have been spotted in new financial scandals.

Suspicious China UnionPay transactions worth $900 million

Before long the Australian Financial Review reported that former CEO Matt Bekier knew a highroller who wagered $100,000 at Star Sydney that is now under investigation by federal police for money laundering.

They used China UnionPay (CUP) to disguise financial transfers to the casino as hotel expenses.

The Star’s top managers knew that the CUP was used whereas it was forbidden, but accepted CUP transactions. According to Oliver White, top corporate legal officer, Mr Bekier thought that relatively small buy-in was “probably not worth the reputation risk”.

They try to find out whether Star is fit to hold its casino licence. And now the NSW reported about $900 million spent on gambling using a Chinese bank card.

They also reported about some other violations including

• Phillip Dong Fang Lee bought $2.7 billion in chips for 15 years;

• and Huang Xiangmo to purchased $1.7 billion in chips over five years.

But they were not connected with money-laundering investigation.

It’s worth mentioning that Star Entertainment, Crown Resorts and SkyCity Entertainment Group have been under investigation for more than a year. The Star Group activity is being examined by

• The NSW Independent Liquor & Gaming Authority;

• the Australian Transaction Reports and Analysis Centre (Austrac).

$900 million used for gaming disguised as hotel expenses

Despite the investigations, the Star Group had facilitated multimillion transactions dressing them up as hotel expenses and CUP was widely used in the casino. China UnionPay is one the largest card payment organizations in the world.

It was forbidden because it helped customers avoid anti-money laundering regulations and Chinese currency controls.

Star responds to the allegations

Star Entertainment denies that they dealt with Macau junket operators.

The Star said that they take “its anti-money laundering obligations very seriously” and fully co-operate with gambling commissions.

CUP scheme is “legally workable”

Mr. White stated that he knew that the bank forbade using its cards for gambling, but he believed that this scheme is “legally permissible”. He thought CUP’s barring on gambling transactions wasn’t applicable because cards were not used directly on the gambling floor. They worked with CUP cards in the following way:

1. Star’s guests made transactions at the Star’s hotel.

2. Then they got casino chips to the value of the transaction and could use them in the casino.

“I understood that the ultimate use for the funds was for gaming,” he said.

Oliver White didn’t believe the China UnionPay rules could be applied to Star. He admitted his mistake and said that he should have asked for some independent legal advice.

After this inquiry, Matt Bekier, Star’s CEO, resigned in March 2022. The Star explained that the resignation followed issues raised in the public hearings and found evidence of breaching money-laundering laws.

AUSTRAC vs. Crown in court

One more gambling giant, Crown Resorts also faced inquiries for the purpose of investigating

• money-laundering;

• breaching gambling laws;

• dealing with Macau junket operators.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) raised allegations against the largest Australian casino operators in 2021.

Crown can be fined up to $100 million for using Chinese UnionPay cards to withdraw funds for gambling at Melbourne Crown casino. They disguised up to $160 million of gambling transactions as hotel expenses from 2012 to 2016.

According to the AUSTRAC’s report, their “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.”

AUSTRAC focuses on Crown

AUSTRAC started new civil penalty proceedings on 1 March 2022. The investigations were undertaken due to several reports of breaching gambling laws. They discovered the following:

$100 million could be paid by Crown Resorts

Crown Resorts could pay $100 million if AUSTRAC proves that Crown Resorts used CUP to cash out at Melbourne casino.

The royal commission report said “Chinese patrons were assisted in illegally transferring up to $160m in funds from their country”. They used the scheme similar to the one used by Star Group.

What is “China UnionPay process”

The term “China UnionPay process” appeared while Victoria’s royal commission was investigating Crown’s activity in order to find out whether Crown Resorts are fit to hold the casino licence. As a result, the company got two years to reform, otherwise they will lose its licence.

Crown invented the special scheme to get around China’s restrictions. The thing is that, Chinese laws forbid

• companies,

• banks,

• and individuals move capital out of the country freely.

There are strict foreign exchange rules to abide.

Victorian laws also don’t allow using debit or credit cards to buy casino chips. However, the company has designed the way how to bypass gambling regulations of both countries.

The royal commissioner Ray Finkelstein said that for several years, “wealthy Chinese patrons were assisted in illegally transferring up to $160m in funds from their country”. Some wealthy Chinese citizens purchased hotel accommodations or other hotel-related things and then received casino chips worth the sum they spent.He described the “China UnionPay process” as following:

• “The hotel issued a room charge bill to the patron, falsely asserting that the hotel had provided services to the person.”

• “The patron would pay the bill and be given a voucher acknowledging the receipt of funds. Then the patron exchanged the voucher for cash or chips.”

Another $100 million Crown case

Fran Thorn, the Victorian Gambling and Casino Control Commission chair, noted,“Crown’s China UnionPay process breached important Victorian regulatory obligations, was illegal and constituted serious misconduct.”

The VGCCC is acting on violations of the amendments of Section 68 of the Casino Control Act 1991:

a casino operator must not in connection with any gaming or betting in the casino

(a) accept a wager made otherwise than by means of money or chips; or

(b) lend money or any valuable thing; or

(c) provide money or chips as part of a transaction involving a credit card or a debit card; or

(d) extend any other form of credit

They also violated Section 124 that requires a casino operator to keep certain accounting records to facilitate effective supervision of money transactions.

After the Victorian royal commission, new laws were introduced and they allow the VGCCC to take disciplinary action against Crown Group. According to the investigation, Crown engaged in serious misconduct, and breaking the law.

They increased the maximum fine from $1 million to $100 million. Fran Thorn said she welcomed the severer penalties. Therefore, it’s highly possible that Crown will be fined up to $100 million.

A Crown spokeswoman in turn replied:

“Crown is currently reviewing the notice and will be working cooperatively with the VGCCC to close out this and all other outstanding matters stemming from the report of the Victorian royal commission.”

Crown’s priority is:

• reforming the company

• remediation program

in order “to ensure Crown delivers a safe and responsible gaming environment.”

During the last year, Crown Resort Ltd changed the top management team. Now, it continues reforming their company, and working constructively with the independent monitors.