The recent inquiry into Australian casino group, Crown Resorts, shows how reliance on junkets has rendered casino companies and affiliates actively vulnerable to regulatory, reputation and criminal risks, Political and Corporate Risk Consultancy Steve Vickers & Associates Ltd (SVA) stated in a recent dispatch.
The results of an inquiry held by Australian authorities and released two weeks ago has declared Crown as unfit to hold the licence for its new A$2.2 billion casinos on Sydney Harbour, after condemning the company’s anti-money laundering efforts and criticising its links to Macau junket promoters and triad societies.
According to Steve Vickers – who gave formal evidence to the inquiry led by former Supreme Court judge Patricia Bergin – the investigations serves as a warning to other gaming companies who rely on Macau junkets to find VIP gamers and that may have “in some cases, downplayed the risks of indirectly dealing with triad societies when doing so”.
“This report makes clear that they much change tack, however, and refresh due diligence assessment of junket partners,” Vickers states.
In testimony provided to the inquiry, Vickers stated that some junkets rely on triads to carry out “extra-legal services” such as the promotion of gaming, evasion of capital controls, and collection of gaming debts.
Vickers state that the most “egregious” AML failures by Crown involved activities in VIP rooms operated by Suncity at its Melbourne casino, due to the Bergin report perceived links between junkets and triad activities.
The Bergin inquiry examined numerous instances of suspected money laundering at Crown Melbourne, with footage showing large bundles of A$50 notes being exchanged for gambling chips in one of Crown’s VIP gaming rooms.
The security consultant also warns other businesses included in the same eco-system as gaming companies, such as financial and trading businesses, who transfer funds and are therefore also “vulnerable”, together with hotels, real estate companies and any other businesses that benefitted from the Macau gaming boom.
Any stakeholders were advised to closely monitor changes to regulatory regimes, identify possible vulnerabilities early and respond quickly.
As ane example the security consultant mentions how Crown failed to identify worrying signs that its operations in Mainland China could be targetted, leading to the arrest of 19 of its employees in 2016.
Therefore special attention should be given by companies to new jurisdiction or intentions exposed by Chinese central authorities concerning capital flows and gaming, and how their business or business partners could be exposed to it.
China’s National People’s Congress recently passed an amendment to its criminal law that will, from 1 March 2021, create a new crime against cross-border casinos found to be organizing or soliciting Chinese citizens to gamble and increase penalties for those found guilty of serious breaches.
The amendment specifically targets anyone who ‘organizes mainland Chinese citizens to gamble outside the country (borders)’.
This year China’s Ministry of Culture and Tourism also announced that it would extend its travel blacklist of overseas gambling jurisdictions or countries that promote gambling tourism for Chinese nationals.
The recent measures have further compounded a local junket sector already hit by the Covid-19 pandemic.
“Looking forward the situation will pose challenges to Macau’s foreign casino concessionaires, given the looming end of concessions in 2022,” the consultancy states.