Crown fights to postpone full payment of $450m penalty

Miklos Bolza | July 11, 2023

Crown may have to prove a $450 million penalty for wide-scale breaches of anti-money laundering laws at its casinos needs to be paid in instalments to avoid financial hardship.

The gaming giant agreed to the fine in a lawsuit brought by AUSTRAC, and admitted that it failed to properly track and report suspicious transactions at its Melbourne and Perth premises to prevent possible money laundering by criminal gangs, drug dealers and terrorists.

Money was given to the casinos in suitcases and paper bags or was shifted between accounts from overseas junket operators who did not conduct the necessary checks as to whether the funds were legitimate.

Lawyers for the financial regulator and Crown have spent two days trying to convince the Federal Court to approve the fine.

On Tuesday, Justice Michael Lee said he had been persuaded that the $450 million figure was in the “low end” of the appropriate range.

However, Crown and AUSTRAC’s agreement to pay the full amount in instalments over two years without interest has drawn some criticism by the judge, who argued this was not how the court normally operated.

If the $450 million figure included interest, this meant the penalty would be only around $406 million.

This lower amount may not be in the appropriate range to sufficiently deter Crown from making future breaches, Justice Lee said.

The judge suggested he could approve the $450 million amount but order that Crown Resorts’ chief financial officer Alan McGregor be cross-examined to test claims the firm would experience “significant financial hardship” if made to pay the full amount right away.

Crown’s barrister Philip Crutchfield KC urged the court to approve the penalty without the need for further interrogation, saying evidence given to the court, including a projected loss of $390 million for the 2023 financial year, should be enough.

“On any view, a fine of north of $400 million is going to constitute a sting,” Mr Crutchfield said.

“It’s a very, very large sum of money.”

“It’s a very large sum of money for very egregious conduct,” Justice Lee replied.

Crown was already subject to the “cauldron” of the Federal Court in having to get the penalty approved and there was no need for further interrogation of the CFO, Mr Crutchfield said.

“It’s not really a cauldron if someone’s being cross-examined. It’s more like a tepid bath,” Justice Lee said.

The judge will decide whether the penalty will be approved and whether further inquiry is needed on Tuesday afternoon.