AUSTRAC Puts Onus Of Junket Control on Casinos


Controlling junkets is the responsibility of casino operators, according to AUSTRAC, the government’s financial intelligence agency.

Junkets are under the spotlight following the NSW Independent Liquor and gaming Authority’s (ILGA) probe into Crown Resorts. Allegations of money laundering by junkets at Crown’s Melbourne casino resulted in Crown being deemed unsuitable for a gaming license.

The future of Crown as we know it hangs in the balance. The company won’t cease to exist because it is too large. Its management team, however, is likely to look vastly different in the coming weeks.

Tighter regulations are expected in the wake of the ongoing inquiry. Nobody knows what they are just yet, but tighter restrictions on financial transactions will be high on the agenda.

AUSTRAC CEO Nicole Rose attended a Senate hearing where she made it clear junkets are now AUSTRAC’s responsibility.

“AUSTRAC does not regulate junket tour operators. The onus is on the industry to ensure it complies with its AML/CTF obligations. The Federal Court has also reiterated this view.”

The Victoria Commission for Gambling and Liquor Regulation argued anti-money laundering is a matter for AUSTRAC.

AUSTRAC CEO Admits Junket Licensing is a Goof Idea

Kristina Keneally is a Labor Senator who expressed concerns about junkets. Gaps in gambling-related rules and regulations are open to exploit.

“Someone can come in on a junket with money from God knows where and distribute to God knows who afterwards. It just seems a massive gap in the regulation.”

AUSTRAC’s Rose confirmed domestic regulation doesn’t apply to foreign companies. Rose did admit, however, a licensing requirement for junkets is a good idea and a step in the right direction.

New Crown Investigation Launched

Things have gone from bad to worse for Crown with AUSTRAC launching an official investigation into the company. AUSTRAC is looking into whether or not Crown broke anti-money laundering rules. Crown’s Chairman Helen Coonan recently conceded Crown’s ineptitude regarding anti-money laundering laws.

This isn’t the first time the paths of Crown and AUSTRAC have crossed. The regulator looked into Crown in 2017 and found junkets could exploit the casino’s practises.

“From the casino’s perspective, all the front money comes from the junket tour operator and all the winnings go to the junket tour operator,” the report said. This means that all reporting on these transactions occurs only under the junket tour operator’s name and not the financial activity of the individual participants. This is a significant vulnerability for junket operations. While there was a theoretical acceptance that junkets may be exploited, it was AUSTRAC’s view that this possibility was not taken seriously.”

Crown Ceases Working With Junkets, For Now

Crown recently announced it has stopped working with junkets in the light of the ILGA inquiry. The company’s statement to the Australian Securities Exchange said this is a permanent measure, but it isn’t. Crown is only stopping junket activity until June 30, 2021. It hopes to complete a “comprehensive review of its processes related to junket operators” by then.

A lawyer for crown made it clear stopping dealing with junkets isn’t an admission of guilt. Perry Herzfeld SC was quick to deflect those guilty claims.

“We accept they had shortcomings, but we don’t accept the characterisation that they were not robust. A system can be described as robust even though an error has occurred.”

Ceasing business with junkets until June 31, 2021 won’t do Crown any harm. While it is true the ultra-rich VIPs junkets bring to Crown are vital to the casino’s success, those VIPs simply aren’t travelling like they were thanks to COVID-19.

Tight travel restrictions are still in place in China and remain so for the foreseeable future. It smacks of desperation, a final thrown of the dice in the hope banning junkets saves them. It doesn’t look like it has worked as Crown still hasn’t opened its $2.2 billion Barangaroo complex.