‘Shoeboxes of Cash’ Detailed in Crown Money Laundering Suit

(Bloomberg) -- Crown Resorts Ltd. has been sued by Australia's financial crimes regulator for “innumerable” breaches of anti-money laundering laws, including allowing customers to use shoeboxes stuffed with cash to gamble, adding to the troubles faced by the scandal-plagued casino operator.

Crown's non-compliance with anti-money laundering rules was “longstanding, systemic and reflective of wholly inadequate oversight by the board and senior management,” the regulator said in a statement of claim filed in the Federal Court on Tuesday. This exposed Crown “to the risk of being exploited by organized crime,” the regulator said.

Crown last month agreed to a A$8.9 billion ($6.5 billion) takeover from U.S. private equity giant Blackstone Inc. The deal ends a sorry chapter in Crown's history after it was found unsuitable to run its Sydney casino -- which is still shut more than a year after it was scheduled to open -- and given two years to address a litany of wrongdoing at its flagship Melbourne casino, including underpaying taxes and exploiting problem gamblers.

Melbourne-based Crown has previously said it expects to pay “significant civil penalties” from the regulator's probe. In 2020, Westpac Banking Corp. paid with a record A$1.3 billion fine to settle more than 23 million breaches of anti-money laundering laws. Commonwealth Bank of Australia paid A$700 million in 2018 to settle more than 53,000 breaches.

“You can safely say that it will be a very large fine,” said Robert Wyld, from legal firm Johnson Winter & Slattery who specializes in the management and resolution of complex commercial civil and criminal disputes. The penalty could potentially be between A$500 million and A$1 billion, given the Westpac and Commonwealth Bank fines, he said.

In its statement of claim, Austrac, as the regulator is known, highlighted the behavior of 60 customers at Crown's Melbourne and Perth casinos whom the company failed to carry out appropriate due diligence.

Suspicious Transactions

They engaged in large transactions that appeared suspicious, including bringing cash in shoeboxes or cardboard boxes, plastic bags, small denominations of notes and counterfeit cash, Austrac said in its claim. Crown was aware that some of the customers had been charged or arrested in connection with offenses, including dealing with the proceeds of crime and money laundering.

Between them, the 60 people had a turnover of more than A$70 billion and losses (or Crown wins) of about A$1.1 billion, Austrac said.

The regulator also identified a further 447 customers who engaged in repeated patterns of transactions consistent with money laundering, including the quick turnover of casino chips with little or no gaming activity.

Crown “chose to elevate customers' desire for privacy over AML/CTF compliance, including in cases where Crown Melbourne or Crown Perth were aware customers had raised red flags,” the regulator said in its claim.

Crown shares fell slightly in Sydney on Tuesday to be recently trading at A$12.35 against Blackstone's offer price of A$13.10. The bid still needs approval from gaming regulators and Crown shareholders.

In a statement Tuesday, Crown said it has developed a comprehensive remediation plan and overhauled its approach to managing financial crime risk. It is reviewing Austrac's statement of claim.