Shares in Crown Resorts sank as much as 10 per cent after the Australian casino operator said it is being investigated by the country’s financial crimes regulator for potential breaches of anti-money laundering and counter terrorism financing rules.
Crown said Austrac identified concerns during a September 2019 compliance assessment at its Melbourne casino that focused on its management of customers identified “as high risk and politically exposed persons”.
“The potential non-compliance includes concerns in relation to ongoing customer due diligence, and adopting, maintaining and complying with an anti-money laundering / counter-terrorism financing program,” the company said.
Crown said it would fully co-operate with the investigation. Austrac confirmed it had begun a probe but would not comment further.
Shares in Crown closed down 8.2 per cent on Monday as investors digested the latest in a series of regulatory investigations into the group’s conduct and governance.
The latest investigation piles more pressure on the company’s board, which is already under fire from shareholders over governance failures highlighted by an inquiry in New South Wales linked to its Sydney casino.
Some proxy advisory groups, including Ownership Matters, have advised shareholders to vote against three incumbent directors of Crown who are up for re-election at its annual meeting on Thursday.
Several Australian investors including Perpetual, which owns just over 9 per cent of Crown, are expected to oppose the re-election of John Horvath, Crown’s deputy chairman. US private equity group Blackstone, which holds a 10 per cent stake, has not yet indicated how it will vote.
NSW authorities are investigating whether Crown Sydney, a A$2.2bn ($1.6bn) development due to open in December, should be allowed to retain a casino licence. The probe follows media reports that organised crime gangs laundered money at the company’s casinos.
Dean Paatsch, co-founder of Ownership Matters, said the Austrac inquiry was potentially very serious, and that in the interest of board accountability shareholders should vote against all incumbent directors up for re-election at the AGM.
Austrac fined Westpac, Australia’s second-largest lender by market capitalisation, a record A$1.3bn last month over breaches of anti-money laundering laws.
Elizabeth Sheedy, an expert in governance at Macquarie University, said evidence to the NSW inquiry highlighted questions over the independence of nonexecutive directors of Crown, including members of its risk committee.
“In my view shareholders should be asking themselves how the directors mentioned above can justify their positions on the board, and voting accordingly,” she said. “The entire risk committee should be resigning and returning their fees as they have utterly failed in their duties in relation to risk management.”
The NSW inquiry has identified concerns over a controlling shareholder protocol that enabled Crown directors to pass on internal financial forecasts to James Packer — the Australian billionaire who owns 36 per cent of the group — shortly before he sold a stake in the business to Macau-based gaming group Melco Resorts last year.
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