Crown Resorts Faces Second Money-Laundering Class Action

Article by : Helen Dec 23, 2020

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Already defending itself against a class-action filed three years ago over money-laundering claims, shareholders recently filed a second class action.

The new class action accuses Australia-based Crown Resorts of misleading investors regarding anti-money laundering efforts. Leading the litigation is Melbourne-based Maurice Blackburn Lawyers, which was established in 1919 and has led many successful class actions.

The law firm three years ago initiated a still-active class action accusing Crown Resorts of a lack of oversight that enabled managers to use its Melbourne casino for money laundering. Nineteen employees were detained in China in 2016, but class plaintiffs say Crown Resorts did not fully disclose the matter to investors or regulators and caused a $1.3 billion loss for investors via reduced share values.

The newest class action filed in Victorian Supreme Court on Dec. 11 says Crown Resorts has not done enough to correct prior issues, which has led to an active investigation into Crown Resorts regarding potential money laundering at its Melbourne casino. The class includes all Crown Resorts shareholders and accuses crown of misleading or deceptive practices by repeatedly assuring investors Crown Resorts has effective measures to prevent money laundering while complying with Australia’s anti-money laundering laws.

The class says Crown Resorts, since at least December 2014 through October 2020 acted in a manner that is contrary to the best interests of its shareholders. Instead of seeking punitive damages, the class wants Crown Resorts to buy back shares to restore losses suffered by investors.

The class also wants Crown Resorts to implement effective deterrents to money laundering. That includes properly training casino workers and managers in anti-money laundering techniques and affirming program success via an accredited third-party monitor. Anything less would not provide investors with sufficient confidence that Crown Resorts has overcome its possible money laundering issues and can move forward without risking gaming licenses or triggering criminal probes into casino business activities.

Crown Resorts in October informed the Australian Stock Exchange that it was under investigation by the Australian Transaction Reports and Analysis Centre (Austrac) for potential money-laundering offenses. If Austrac investigators find evidence of wrongdoing, Crown Resorts could face very costly fines totaling millions of dollars and potentially lose gaming licenses. Crown Resorts has casinos in Perth as well as Melbourne and is building a third casino in Sydney.

Austrac investigators are looking into how Crown Resorts officials operating its Melbourne casino handle patrons who are “identified as high-risk and politically exposed.” Regulatory concerns include “ongoing customer due diligence” and the casino’s efforts to comply with federal anti-money laundering and counter-terrorism financing efforts. Officials for Crown Resorts said they intend to cooperate with the Austrac investigation.

The October announcement by Crown Resorts and revelations of the potential money-laundering issues triggered an 8-percent drop in Crown Resorts’ share value, which equaled a $500 million loss for investors. The class action essentially seeks an indemnity ruling to restore the $500 million loss suffered on Oct. 19.

Crown Resorts is already under investigation regarding its efforts to lure Chinese high-rollers and its relationship with global tour operators that might be connected to Asian organized crime syndicates. Separate investigations into the Crown Resorts’ casino licenses and possible business connections with criminal organizations further add to potential legal woes for one of Australia’s largest casino owners and operators.

Although it is beset with legal and regulatory woes, Crown Resorts intends to open its Sydney casino in 2021. The Barangaroo casino and integrated resort project includes a 75-story tower housing permanent residences, a six-star hotel, and world-class restaurants, clubs, and bars. The project is costing Crown Resorts and its investors $2 billion.