sienna smith's blog : Crown's Sydney Casino Opens; Australian Gambling Venues Still Attracting Money Launderers

Australian Government Not Taking Gambling Collateral Damage Seriously

A new $2 billion casino built by Crown Resorts at Barangaroo Point in Sydney will open its doors to gamblers for the first time this week. But only if they are "VIPs".

The operating license remains conditional, as Crown Resorts was deemed unfit to operate the casino in 2021 by a New South Wales independent commission of inquiry headed by former Supreme Court Justice Patrika Burgin.

The Victorian and Western Australian investigations into Crown's Melbourne and Perth casinos reached the same conclusion, but did not go so far as to recommend revocation of the licenses. An agreement was reached, the directors resigned, and the majority shareholder sold out and was acquired by U.S. private equity player Blackstone Group.Additional details about this development can be found with just a mouse click on the next page.

Crown was allowed to open a casino at Barangaroo Tower in Sydney.

Crown Resorts approved to open a casino at Barangaroo, Sydney.

But will it put a stop to the main reason why a Victorian investigative body found that Crown in Melbourne had engaged in "illegal, dishonest, unethical, and exploitative" practices: facilitating money laundering?

This may not be anything special. The New South Wales investigation into rival casino Star Sydney also raised allegations that billions of dollars were funneled through the casino in violation of anti-money laundering rules.

In Crown's experience, simply being found ineligible to hold a casino license is still not enough for the government to revoke it.

The fact of the matter is that legal casinos are always illegal. Gambling, whether illegal or legal, will always attract criminals.

Why Criminals Love Gambling

When casinos were illegal, they were a lucrative source of income for those willing to take the risk.

A 1974 study of a dozen illegal casinos in Sydney estimated that they made about $15 million a year (equivalent to $130 million today).

The Crown Casino logo

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The licensing and regulation of casinos was intended to free the casino industry from criminal organizations and protect public institutions from beterbingo.com.

However, as allegations in four investigations into casinos over the past two years show, legal casinos continue to be plagued by crime and criminal associations because of their value as money laundering venues, whether intentional or not.

Where there is money, there must be laundering.

Large proceeds from crime, whether drug trafficking or fraud, must be "laundered" before criminals can spend them.

Why. Because law-abiding citizens are expected to report their income and pay taxes. Individuals who have large amounts of assets despite having no obvious source of income will attract attention.

Making "dirty money" look as if it comes from clean sources has become a massive global industry. The United Nations Office on Drugs and Crime estimates that US$42 billion (A$6 billion) is laundered globally each year, equivalent to 2% to 5% of global GDP.

In Australia, the amount of local criminal proceeds laundered each year is estimated at more than US$13 billion, with billions more in offshore criminal proceeds.

Crown Casino logo adorns side of Melbourne facility

Austrac takes legal action against Crown Resorts for alleged financial law violations

According to financial crime expert Nathan Lynch, author of The Lucky Laundry (HarperCollins, 2022), Australia has become "one of the world's most attractive destinations for money launderers.

How to Launder Dirty Money

There are various ways to launder money. One is to own a legitimate business and declare the dirty money as income.

Another is to purchase real estate through obscure legal mechanisms. Federal agencies estimate that tens of billions of dollars are laundered annually through the Australian real estate market.

The easiest way to do this, however, is through gambling.

In 2018, an estimated $25 billion flowed into the Australian gambling industry, the highest per capita amount in the world. Nearly $5 billion of that amount was spent in casinos.

Money laundering in casinos is surprisingly easy. You enter with a bag of "dirty" cash. You exchange it for chips. Play for a while, win a little, lose a little, cash out.

Now all the dirty money you came in with is clean. If anyone asks, tell them you won.

Regulation is not enough.

Australia has some of the strictest anti-money laundering regulations in the world, and they are getting stricter.

From 2020, transactions over A$10,000 and the identity of the recipient must be recorded and reported to Australia's anti-money laundering agency, Austrac.

But this has only narrowed the ability to launder huge sums of money at a time. With each change, criminals respond.

Crown Casino in Melbourne

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Even poker machines in local pubs and clubs can be used to launder money.

The NSW Crime Commission is investigating the nature and extent of money laundering by poker machines in the state.

Of greatest concern is the lack of transparency. Poker machine tickets are anonymous if they are charged less than $5,000. Anyone can put up to $4,999 in "dirty cash" into these pokies, make one $5 bet, and redeem the rest as "clean winnings."

With more than $85 billion invested annually in 95,000 pokies spread across 4,000 venues, this is nearly impossible to crack down on.

What can be done about it?

In her scathing report, Commissioner Burgin raised the possibility of a statewide scheme to combat money laundering by requiring the use of gambling cards that would allow cash to be tracked within casinos.

She noted that casinos are already free to implement their own schemes "of a similar kind for their own patrons".

New South Wales appeared to be cool to the idea, a sign that the Australian government is not taking the collateral damage associated with gambling seriously.

Until things change, the implicit message will remain the same: if you want to launder illicit money, go to the most convenient gambling venues.

This is an edited version of an article that appeared in Conversation. Alex Simpson is a senior lecturer in criminology at Macquarie University.

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