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AUSTRAC is investigating ASX casinos Crown (CWN), Star (SGR) and Skycity (SKC)

It has been announced by multiple ASX casino businesses that they are being investigated by the regulator AUSTRAC.

What’s going on?

It has been announced by SKYCITY Entertainment Group Limited (ASX: SKC), Crown Resorts Ltd (ASX: CWN) and Star Entertainment Group Ltd (ASX: SGR) that they are all on the receiving end of an AUSTRAC enforcement investigation.

Each of the ASX-listed casinos said that the regulator has identified potential serious non-compliance. The casinos under investigation are SkyCity Adelaide, Crown Perth and The Star City.

This is all in relation to laws relating to anti-money laundering and counter-terrorism financing.

How did the casinos respond?

Star said that AUSTRAC is focused on The Star Sydney’s management of customers identified as high risk and politically exposed people in FY16 and FY19. Star said AUSTRAC hasn’t made a decision about what action will be taken. The Star said it takes its AML obligations very seriously and will fully co-operate with AUSTRAC about requests for information, documents and the investigation.

Crown Perth said that it will fully co-operate with AUSTRAC as it investigations. The board advised it has recently received legal advice that a practice that existed at Crown Melbourne between 2012 and 2016 contravened the Casino Control Act. It involved receiving payment from debit or credit cards of international guests at Crown Melbourne’s Crown Towers Hotel, with the funds then available to the patron for gaming at the casino. It apparently wasn’t allowed to do this. Crown transacted over $160 million through the hotel card process, which ceased in November 2016. This adds to its existing problems.

Skycity said SkyCity Adelaide is being investigated, with the focus being management of customers identified as high risk and politically exposed people in FY16 and FY19. AUSTRAC hasn’t made a decision about what regulatory response it’s going to do. Skycity is going to fully cooperate and it said it takes its responsibilities and obligations very seriously.

Summary thoughts

The casinos face a lot more scrutiny by regulators and they can be fined a lot if they get things wrong. Each case may turn out differently, so I wouldn’t want to bet on the result.

I think I’d want to wait and see how things turn out before considering buying shares.

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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