SYDNEY (Reuters) – Australia’s financial crime agency began investigating casino giant Crown Resorts Ltd. CWN.AX on suspicion of failure to comply with anti-money laundering protocols, put the planned resort opening under pressure and sent its shares tumbling.
The Australian Center for Transactions Reports and Analysis (AUSTRAC) said it was initiating a “law enforcement investigation” into Crown’s premier casino in Melbourne following a compliance assessment that began a year earlier, without commenting further.
AUSTRAC’s concerns are focused on the management of Crown Melbourne customers who are identified as high-risk and politically exposed, Crown said in a separate statement.
The investigation adds to an already big headache for the company 37% owned by billionaire James Packer as it pushes up plans to open a new casino in Sydney in December.
Other investigations by state regulators have aired allegations of “malfunctioning” senior management, poor risk controls and issued false public statements.
The investigation has asked the director of Crown why the company opened a casino during a review that will decide if he can keep his license.
That was sparked by media reports in mid-2019 that accused Crown of doing business with casino tours, or “junkets,” an unexamined operator of links to organized crime. Crown initially denied the allegations in a full-page newspaper ad but has admitted on the investigation section of the denial to be misleading.
Crown shares were down 10% late in the morning, compared to a higher overall market .AXJO, as investors weigh the impact of other challenges for companies already facing contention at its annual general meeting on Thursday.
“It’s going to be turbulent for a while. It leaves written uncertainty everywhere, ”said Mathan Somasundaram, CEO of investment research at Deep Data Analytics.
The last high profile company AUSTRAC pursued, lender No. 2 Westpac Banking Corp. WBC.AX, approved a $ 1.3 billion fine last month for unrelated compliance failures.
Crown fell into crisis in 2016 when 16 of its staff were jailed in China for selling casino holidays, violating the country’s gambling ban. Crown quit its overseas interests to focus on Sydney resorts to increase profits.
Years after that, Packer quit the board of directors of the company he founded. At a regulatory probe this month, he acknowledged demanding frequent trade reforms from management, despite having no official role, while negotiating a series of takeover deals that never took place, all without the knowledge of shareholders.
Reporting by Byron Kaye in Sydney and Anushka Trivedi in Bengaluru; editing by Diane Craft and Lincoln Feast.