A report by AUSTRAC has sent a clear message to casinos that junket tour operators are high risk and anyone doing business with them is exposing Australia to money laundering and foreign interference.
The criminal associations of foreign junket operators – whose business it is to bring high rollers to a casino as part of a luxury holiday package in return for a commission from the casino – are well documented, but foreign interference is less well known.
AUSTRAC’s omnibus risk assessment into junket tour operators released on Friday sent a clear message to all entities to reassess the risk of engaging with foreign junket tour operators.
If the casinos are smart they will realise the risk/reward is no longer worth it. AUSTRAC will be watching.
And unlike the AUSTRAC of 2017 – when it conducted a casino junkets campaign with a finding that “casinos are broadly aware of and comply with their Anti-Money Laundering and Counter Terrorism Financing Act (ML/CTF) obligations regarding casino junkets” – the financial crimes watchdog wants it known that the days of rose-coloured glasses are over.
AUSTRAC chief executive Nicole Rose issued a statement, saying “money laundering and financial crime enables serious criminal activity such as drug trafficking and human trafficking which causes harm to our communities”.
Over the years there have been a number of media exposés on Crown. In 2017 ABC’s Four Corners exposed links with junkets, organised crime and money laundering.
In 2019 a joint venture with The Sydney Morning Herald, The Age and 60 Minutes revealed Crown had links to Chinese crime bosses, drug syndicates, money laundering and alleged sex trafficking rings.
It was operating in plain sight but the politicians, state regulators, the corporate regulator and AUSTRAC did nothing.
The NSW casino inquiry into Crown Resorts shows that those regulators sat on their hands and the board shamefully did the same.
The latest report reveals that between April 2018 and March 2019 an estimated 635 suspicious matters reporting (SMR) were submitted to AUSTRAC by 15 entities including casinos, banking and remittance operators worth a total value of $363 million. (Under the Anti-Money Laundering and Counter Terrorism Financing Act, reporting entities have an obligation to report suspicious matters to AUSTRAC).
Of the 15 entities, two casinos accounted for more than two-thirds of the suspicious matters and almost half of those reported suspected money laundering.
AUSTRAC also identified a small number of transactions where entities could be using money held in casino accounts to make political donations which could be linked to foreign interference.
“The provision of political donations in itself is not illegal, however, the unusual source of the funds, involving potentially covert international money movement, raises concerns for potential foreign interference,” the report warned.
It then spelt out how serious a risk it was. It said the involvement of foreign politically exposed persons (PEPs) in junket tour operations increased the risks of exploitation “because these individuals are inherently more likely to hold political ideologies, wield political power and have access to government funds”.
If the findings aren’t enough for companies such as Star Casino and Crown to ditch ties to foreign junket operators, then the stench of political interference and donations might do it for them.
The fallout from Westpac, which was found to have facilitated financial transactions of paedophiles, and Commonwealth Bank, which enabled drug traffickers and terrorists, makes it clear there is zero tolerance for companies that have poor risk management systems.
The punishment metered out to both banks resulted in board and senior management changes, massive fines and reputational damage.
Indeed at Westpac’s annual general meeting on Friday, chairman John McFarlane gave a speech that said 2020s results were depressed by high COVID-19 related provisions as well as an AUSTRAC penalty of $1.3 billion. “In the board’s view, the best course of action was to reach settlement and draw a line on this matter,” he said.
McFarlane may want everyone to move on from the AUSTRAC scandal but reputations take time to repair and in the bank’s case it has a court-enforceable undertaking with the prudential regulator that it has to complete before it gets absolution.
The reality is the AUSTRAC report and the revelations in the NSW casino inquiry about junket operators shows something radical needs to happen as it is too opaque to control.
AUSTRAC found evidence that some junket tour operators issued cash to players when they landed in Australia. It said the industry reported 64 suspicious matter reports (SMR) concerning 33 junket tour operators related to large cash withdrawals from junket accounts with a total value of $23.6 million.
“These SMRs described junket operators providing large cash amounts under a range of circumstances, such as persons who were losing, persons withdrawing large amounts of cash and then immediately leaving the gaming floor, and junket staff providing cash to individuals who were not players on the junket.”
AUSTRAC didn’t know what the cash was being used for but said there was some indication it was being used to pay for goods and services (including illicit goods and services) and in other cases the junkets were retaining the cash to avoid tax.
“One of AUSTRAC’s partners is aware of a potential methodology whereby money to fund players’ junket activity is raised by directing the player to purchase shares in a foreign company, rather than simply depositing the money into an offshore bank account,” the report says.
“AUSTRAC considered the nature and extent of the money laundering threats associated with junket tour operations, and assesses the risk to be high,” it warned.
In November, Crown said it would suspend dealings with all junkets unless they were approved by all state gaming regulators. But there will be a lot more twists and turns in this space as Australians have made it clear companies that act as facilitators for money laundering need to be punished.
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Source: Thanks smh.com