Australia financial crime watchdog investigates casino giant Crown, shares tumble

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, putting a planned resort opening under pressure and sending its shares tumbling.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) said it began an “enforcement investigation” into Crown’s main casino in Melbourne following a compliance assessment started a year earlier, without commenting further.

AUSTRAC’s concerns were “focused on Crown Melbourne’s management of customers identified as high risk and politically exposed persons”, Crown said in a separate statement.

The investigation adds to an already sizable headache for the company 37% owned by billionaire James Packer as it pushes ahead with a plan to open a new casino in Sydney in December.

Another inquiry by a state regulator has been airing allegations of “dysfunctional” senior management, poor risk control and issuing false public statements.

The inquiry has already asked Crown’s directors why the company is opening a casino during a review which will decide if it can keep its licence.

It was triggered by media reports in mid-2019 which accused Crown of doing business with casino tour, or “junket”, operators who had not been vetted for organised crime links. Crown initially denied the allegations in full-page newspaper advertisements but has acknowledged at the inquiry parts of the denial were misleading.

Shares of Crown fell 10% by late morning, compared to a higher overall market .AXJO, as investors weighed the impact of another challenge for a company already facing a showdown at its annual general meeting on Thursday.

“It will be volatile for a time. This has got uncertainty written all over it,” said Mathan Somasundaram, CEO of investment researcher Deep Data Analytics.

The last high profile company pursued by AUSTRAC, No. 2 lender Westpac Banking Corp WBC.AX, agreed to a A$1.3 billion fine last month over unrelated compliance failures.

Crown was plunged into crisis in 2016 when 16 of its staff were jailed in China for selling casino holidays, violating that country’s gambling ban. Crown quit its overseas interests to focus on the Sydney resort to grow profit.

In the years since, Packer has quit the board of the company he started. At the regulator inquiry this month, he acknowledged demanding frequent trading updates from management, despite having no official role, while negotiating a series of takeover deals which never eventuated, all unbeknownst to shareholders.

Reporting by Byron Kaye in Sydney and Anushka Trivedi in Bengaluru; editing by Diane Craft and Lincoln Feast.