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Melbourne Casino Crown Faces New Money Laundering Scandal

Richard Marley
July 02, 2021
2 minutes read
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Crown’s licence for its Sydney casino has been suspended after an investigation revealed it facilitated money laundering.

Crown Resorts, a major casino in Melbourne, is facing a money laundering probe yet again stemming from their illegal acceptance of credit card payments in exchange for gambling chips through the hotel desk.

Steven Blackburn, the casino giant’s chief financial crimes officer, revealed to Victoria’s royal commission that a review into the credit card transactions would unveil money laundering activities and that the total amount could total more than the $160 million already identified.

Crown’s licence for its Sydney casino has been suspended for the time being after an inquiry found it was aiding money laundering. The credit card payments pose a new dilemma for the James Packer-backed group as Victoria’s royal commission reviews its Melbourne casino licence.

‘Crown disclosed in June that it had breached Victorian law between 2012 and 2016 by allowing international visitors to make credit card charges of up to $500,000 to their hotel accounts in exchange for casino chips’ https://t.co/GPnwlvv02p

— Margaret Hollingdale (@MargaretHollin1) July 1, 2021

Blackburn, who recently joined the company from NAB (National Australia Bank), stated on Thursday that fraudulent practices, that were spotted by a junior employee during a staff training session in March, should have been known by the senior managers as they lead to legal and money laundering issues.

Royal Commissioner Ray Finkelstein suggested Crown Resort was are of the fraudulent practices but “simply didn’t care” because they decided: “we’re not going to interrupt the flow of revenue and if we break a few laws, bad luck.”

The Commissioner also believes that this scandal is no accident, and Crown was purposely facilitating credit card payments through its front desk and issuing fake hotel invoices.

“The whole thing was a fraudulent scam from the outset and everybody involved would have known that,” he added.

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Philippines: Banks Reminded to Closely Monitor and Report Suspicious Transactions
Philippines ramps up efforts to step out of the FATF’s grey list and reminds banks to monitor and report suspicious activities related to financial crimes.

Philippines is taking more steps to be removed from Financial Action Task Force’s (FATF) grey list and as part of these steps, the Bangko Sentral ng Pilipinas (BSP) has reminded banks to keep a close eye on suspicious activities.

The Deputy Governor of BSP, Chuchi Fonacier, said that banks must submit proper Suspicious Transaction Reports (STRs) with links to tax crimes, particularly the ones with a tax deficit exceeding P25 million and violating the National Internal Revenue Code of 1997.

In addition to this, Fonacier said that BSP-supervised financial institutions (BSFIs) must include the suggested tax-related phrases in the narrative STRs with links to financial crimes or predicate offences like fraud, violation, corruption, and intellectual property.

Chuchi said, “BSFIs are reminded to conduct commensurate measures and consider the results of the above reports in their institutional risk assessment as well as risk profiling of the real estate sector, to improve their overall anti-money laundering/counter- terrorism and proliferation financing framework.”

Back in April, an analysis of STRs with possible links to tax crimes was released, in which the Anti-Money Laundering Council (AMLC) uncovered P62.5 trillion worth of suspicious activities between January 2018 and November 2020. Based on this analysis, approximately 92% of the STRs filed from January 2018 to November 2020 contain “the amount involved is not commensurate with the business or financial capacity of the client.”

The remaining 8% STRs filed by covered persons pertain to certain suspicious circumstances, for instance, no underlying trade or legal obligation, analogous or identical transactions.

According to the financial intelligence unit, covered persons including BSFIs must incorporate phrases like taxation, taxable, tax fraud, or tax crime, and may refer to income tax details.

Based on money laundering investigations, cases and STRs, the AMLC reported that the real estate sector is at a higher risk of corruption, fraud, illegal drugs, including violation of Securities Regulation Code.

The AMLC said, “Criminals potentially facilitate movement and hide illegal proceeds through the purchase of or investment in real properties. Assets are also used as clandestine hideouts for illegal operations.”

Philippines was added to the FATF’s grey list on June 25 for strategic deficiencies in money laundering, proliferation financing, and terrorism financing regimes. Benjamin Diokno, BSP Governor and AMLC Chairman, is confident that the country will step out of the grey list before or in January 2023 as it has already addressed the action plans indicated in the 2019 Mutual Evaluation Report of the Asia Pacific Group (APG) on Money Laundering.

Suggested: 40 recommendations of FATF – Shaping the future of your business

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Analyzing the UK and US Gambling Industry by Numbers
Businesses and people in the gambling sector are aware of the risks involved and what are their possible consequences. A few years back, gambling was illegal, but now countries are moving to make it legal as it is a booming industry and can contribute to the economy. It is closely related with the financial sector as the online payment gateways are used for funds transfer, this makes it vulnerable to money laundering and illegal funds transfer. According to BBC, Star Entertainment – Australian gambling giant alleged for money laundering.

Post Covid-19 Landscape of Casinos

Like other sectors, the gambling industry is also influenced by advanced technology trends and is now available on the internet. There has been a debate about regulations in the gambling industry. Experts think that the industry’s prosperity is subject to the regulations imposed on it. Recently, it has entered the class of big sectors, being called a billion-dollar industry.

The gross gambling revenue of Europe is forecasted to reach 29.3 billion in 2022. (Statista)

In 2020, online gaming witnessed a 393% increase in players, with the UK exhibiting 261.9% growth. (CNBC)

In the United Kingdom, online casinos accounted for £5.51 billion. (United Kingdom Gambling Commission)

During the fiscal period 2021-26, the online gambling market is forecasted to grow with the CAGR of 11.94%. (Mordor Intelligence)

In 2020, United States gambling revenue skidded 31% to USD 30 billion. (Statista)

During the pandemic, US casinos lost 27% of normal operating days. (American Gaming Association)

Around one half adults of New South Wales gamble. (Responsible Gambling)

The Australian authorities received 6000 gambling scam reports in the first quarter of 2020. (Forbes Advocate)

In 2022, the share of regulated gambling will be 80.1% in Australia. (European Gaming and Betting Association)

Leg-pullers for Online Gambling

Without a doubt, the online casino market is thriving. Nevertheless, it is also true that most gambling companies fail in the initial two years. Although, poor management, research and planning, inadequate structure, and scanty marketing are the reasons behind this. But in modern times, online frauds and scams have become the most crucial leg-pullers for the online gambling sector.

Hackers and cybercriminals use extended and sophisticated means to disrupt the online gambling environment. Let’s discuss what are the vulnerabilities in the digital betting industry.

Multiple Accounts Scam: Biased Gameplay

Fraudsters create multiple accounts over a betting platform using fake and synthetic credentials. This means that the information that is given to the website during account sign-up is completely fraudulent or a mixture of false and authentic user data. For acquiring authentic data, scammers often use phishing techniques.

The intention behind this is to pocket wins for only one particular account. The other players do not get a fair chance of gaming and the service providing platform loses the reputation in this case.

Money Laundering: An Indictable Financial Crime

Everyone in the market knows what money laundering is and how it is done. Because of solid security measures implemented by financial institutions, money launderers have targeted other sectors, gambling being one of them.

As online casinos deal with money directly, it becomes easy for financial criminals to place, layer and extract their illegal funds.

Chargeback Abuse: Fake Claims

Chargebacks are filed by customers where they restrain the (betting) payment by contacting the bank or the card issuer claiming that their card was used without their permission. Fraudsters claim fake chargebacks as it is difficult for gambling sites to fight against friendly frauds because it can damage their relationship with the card issuer.

Enhanced Due Diligence: A Robust Solution for Eliminating Risks

Know Your Customer

Recently the UK and the US have tightened the rules for e-gambling platform providers. This is done considering the increasing cases of online scams and money laundering related activities in the gambling industry. The UK has mandated gambling sites to confirm the ID and age of the players before onboarding them.

Know Your Customer (KYC) is a method of identity verification of online users mostly used by financial businesses. It is a software-based online, automated and AI-powered process in which the users’ (or gamblers’) identity is verified by examining their government-issued identity documents. Below are the verifications performed in the KYC process.

Facial Recognition: Matching the gambler’s live captured selfie with the photo ID

Address Verification: Extracting and validating the residential address from legitimate documents

Age Confirmation: Calculating the age by drawing out DOB from ID documents and confirming that it falls under the specified range

Anti Money Laundering Screening

To counter money laundering or any other illegal transfer of funds, anti money laundering solutions can be used which screen the gambler names against the global watchlist, sanction lists and PEPs (Politically Exposed Persons). It filters the players by their risk profile, where the gambling platform can get to know about previous criminal history of players. Moreover, Enhanced Due Diligence is performed on high-risk customers

In the EDD process, transactions that exceed USD 5000 – USD 10,000 threshold go through transaction monitoring and background screening. In the banking sector, EDD has proved an effective method for combating identity frauds and money laundering.

Gambling sites can comply with KYC laws set by global regulators through enhanced due diligence. It is a robust method and expedites the speed of the onboarding process. Once implemented, the players feel safer since there is a less likelihood of losing funds to criminals and money launderers

Key Takeaways

Today’s tech-savvy fraudsters have found advanced ways of social engineering, making account taker over and identity theft easy. To address this dilemma, governments are planning to regulate the gambling sector. Additionally, rising AML penalties demand automated AML/KYC solutions for compliance purposes. AI-powered AML/KYC solutions that perform identity verification and AML screening in real-time can help gambling industry in combating frauds.

Want to know more about regulatory compliance of gambling sector?

Melbourne Casino Crown Faces New Money Laundering Scandal

Post Covid-19 Landscape of Casinos

Leg-pullers for Online Gambling

Multiple Accounts Scam: Biased Gameplay

Money Laundering: An Indictable Financial Crime

Chargeback Abuse: Fake Claims

Enhanced Due Diligence: A Robust Solution for Eliminating Risks

Know Your Customer

Anti Money Laundering Screening

Key Takeaways

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