FEDERAL COURT OF AUSTRALIA

Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Crown Melbourne Limited [2023] FCA 782

ORDERS

THE COURT DECLARES THAT:

Standard AML/CTF programme contraventions

1.    The first respondent (Crown Melbourne) contravened s 81(1) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act) on each occasion it commenced to provide a designated service to a customer from 1 March 2016 to 1 November 2020 in circumstances where:

(a)    Part A of its standard Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) programme did not:

(i)    have the primary purpose of identifying, mitigating and managing the risk that Crown Melbourne may reasonably face that the provision of designated services at or through a permanent establishment of either entity in Australia might (whether inadvertently or otherwise) involve or facilitate money laundering or terrorism financing (ML/TF), as required by s 84(2)(a) and (c) of the Act and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (Cth) (Rules); and

(ii)    comply with s 84(2)(c) of the Act, which required that Part A of a standard AML/CTF programme comply with Ch 8 and 15 of the Rules;

(b)    Part B of its standard AML/CTF programme did not comply with s 84(3)(b) of the Act, which required that Part B of a standard AML/CTF programme comply with Ch 4 of the Rules.

2.    The second respondent (Crown Perth) contravened s 81(1) of the Act on each occasion it commenced to provide a designated service to a customer from 1 March 2016 to 1 November 2020 in circumstances where:

(a)    Part A of its standard AML/CTF programme did not:

(i)    have the primary purpose of identifying, mitigating and managing the risk that Crown Perth may reasonably face that the provision of designated services at or through a permanent establishment of either entity in Australia might (whether inadvertently or otherwise) involve or facilitate ML/TF, as required by s 84(2)(a) and (c) of the Act and the Rules; and

(ii)    comply with s 84(2)(c) of the Act, which required that Part A of a standard AML/CTF programme comply with Ch 8 and 15 of the Rules; and

(b)    Part B of its standard AML/CTF programme did not comply with s 84(3)(b) of the Act, which required that Part B of a standard AML/CTF programme comply with Ch 4 of the Rules.

Joint AML/CTF programme contraventions

3.    Crown Melbourne contravened s 81(1) of the Act on each occasion that it commenced to provide a designated service to a customer on and from 2 November 2020 to 1 March 2022 in circumstances where:

(a)    Part A of its joint AML/CTF programme did not:

(i)    have the primary purpose of identifying, mitigating and managing the risk that Crown Melbourne may reasonably face that the provision of designated services at or through a permanent establishment of either entity in Australia might (whether inadvertently or otherwise) involve or facilitate ML/TF, as required by s 85(2)(a) and (c) of the Act and the Rules; and

(ii)    comply with s 85(2)(c) of the Act, which required that Part A of a joint AML/CTF programme comply with the requirements of Ch 9 and 15 of the Rules; and

(b)    Part B of its joint AML/CTF programme did not comply with s 85(3)(b) of the Act, which required that Part B of a joint AML/CTF programme comply with the Rules.

4.    Crown Perth contravened s 81(1) of the Act on each occasion that it commenced to provide a designated service to a customer on and from 2 November 2020 to 1 March 2022 in circumstances where:

(a)    Part A of its joint AML/CTF programme did not:

(i)    have the primary purpose of identifying, mitigating and managing the risk that Crown Perth may reasonably face that the provision of designated services at or through a permanent establishment of either entity in Australia might (whether inadvertently or otherwise) involve or facilitate ML/TF, as required by s 85(2)(a) and (c) of the Act and the Rules; and

(ii)    comply with s 85(2)(c) of the Act, which required that Part A of a joint AML/CTF programme comply with the requirements of Ch 9 and 15 the Rules; and

(b)    Part B of its joint AML/CTF programme did not comply with s 85(3)(b) of the Act, which required that Part B of a joint AML/CTF programme comply with the Rules.

Ongoing customer due diligence contraventions

5.    Crown Melbourne contravened s 36(1) of the Act on 380 occasions between 1 March 2016 and 1 March 2022 by failing to monitor 380 customers in relation to the provision of designated services:

(a)    with a view to identifying, mitigating and managing the money laundering risks that Crown Melbourne reasonably faced; and

(b)    in accordance with Ch 15 of the Rules.

6.    Crown Perth contravened s 36(1) of the Act on 166 occasions between 1 March 2016 and 1 March 2022 by failing to monitor 166 customers in relation to the provision of designated services:

(a)    with a view to identifying, mitigating and managing the money laundering risks that Crown Perth reasonably faced; and

(b)    in accordance with Ch 15 of the Rules.

THE COURT ORDERS THAT:

7.    Crown Melbourne pay to the Commonwealth of Australia a pecuniary penalty in the amount of $300 million pursuant to s 175(1) of the Act.

8.    Crown Perth pay to the Commonwealth of Australia a pecuniary penalty in the amount of $150 million pursuant to s 175(1) of the Act.

9.    Crown Melbourne and Crown Perth pay the penalties in Orders 7 and 8 in the following instalments:

(a)    $125 million in total within 28 days of the date of this order;

(b)    $125 million in total within one year of the date of this order; and

(c)    $200 million in total within two years of the date of this order.

10.    Subject to Order 11 below, pursuant to s 52(2)(b) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), interest payable on the debts arising from Orders 7, 8, 9(a), 9(b) and 9(c) of these Orders (which debts are taken to be judgment debts pursuant to s 175(7) of the Act) be 0% per annum.

11.    In the event of non-compliance with any of Orders 9(a), 9(b) or 9(c) (and in this regard, time shall be of the essence):

(a)    the balance of all outstanding instalments, that is, the balance of the judgment debt be due and payable immediately; and

(b)    interest shall be payable on the balance of the judgment debt from the date as of which the judgment is entered in accordance with s 52(2)(a) of the FCA Act.

12.    Within 14 days of the issue of Crown Resorts Limited’s audited financial statements of:

(a)    financial year 2023; and

(b)    financial year 2024;

the respondents are to provide to the applicant a copy of the audited financial statements and an affidavit from the Chief Financial Officer of Crown Resorts Limited deposing as to whether the respondents are then in the financial position to finalise payment of the balance of the judgment debt, and if not, why.

13.    The applicant has liberty to apply for a variation of the orders deferring the payment of the balance of the judgment debt (on the basis that the financial position of the respondents is such that the repayment of the balance of the judgment debt ought not to continue to be deferred).

14.    Crown Melbourne and Crown Perth pay the applicant’s costs in the amount of $3.4 million within 28 days of the date of this order.

15.    Pending the satisfaction of the judgment debt pursuant to the terms of these orders, the applicant have liberty to apply with any liberty to be exercised by notification to the Associate to Justice Lee.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LEE J:

A    INTRODUCTION AND SIX PRELIMINARY COMMENTS

1    The Chief Executive Officer of the Australian Transaction Reports and Analysis Centre (AUSTRAC) brings this proceeding against Crown Melbourne Limited (Crown Melbourne) and Burswood Nominees Ltd as trustee for the Burswood Property Trust trading as Crown Perth (Crown Perth) (together, Crown).

2    AUSTRAC has sought declarations that Crown contravened provisions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act) and an order that Crown pay a pecuniary penalty to the Commonwealth.

3    Crown has admitted that it has contravened ss 81(1) and 36(1) of the Act. The parties submit that “a penalty of $450 million is appropriate” in the light of the nature and seriousness of Crown’s contraventions, and to deter future contraventions of the Act.

4    At the outset, however, it is worth saying a number of things about aspects of the conduct of this litigation and how agreed orders were proposed to the Court.

5    This proceeding was commenced as long ago as March 2022 by the filing of an originating application and statement of claim. A concise statement was also filed in that month, and the matter was listed before another judge of the Court for a first case management hearing in April 2022. The first case management hearing was stood over to June 2022, and adjourned again in that month, following which time the matter largely remained in stasis.

6    When the proceeding was allocated to my docket in December 2022, I listed the matter for a first case management hearing. In February 2023, shortly prior to the case management hearing, the solicitors for AUSTRAC contacted my Associate, indicating that the parties had consented to yet another adjournment to a date in June 2023, following service of Crown’s defence in May 2023 (that is, some 14 months after the filing of the statement of claim).

7    I determined to proceed with the first case management hearing, at which time I asked counsel why the matter had been the subject of such extraordinary delay. As I remarked then, the Congress of Vienna had taken less time to agree upon the future of Europe following the defeat of the First French Empire than the time the parties had already spent in attempting to agree upon the facts.

8    Be that as it may, counsel informed me that a draft statement of agreed facts and admissions had been progressed, such that any remaining areas of dispute were likely to be narrow and limited to matters of statutory construction. Accordingly, to expedite the matter to hearing, I made orders providing for the filing of a concise response and further conferrals between the parties before a Registrar.

9    As it happened, following further conferrals, an in-principle agreement was struck to resolve all issues of liability and relief. Accordingly, I listed the matter for a further case management hearing in May 2023, at which time orders were made for the filing of joint submissions and the final version of the statement of agreed facts and admissions document.

10    On 30 May 2023, upon the filing of the joint submissions, AUSTRAC put out a press release with the following heading in bold 24 point type: “AUSTRAC and Crown agree to proposed $450 million penalty”, which was in the following terms:

Crown Melbourne and Crown Perth (together Crown) and AUSTRAC have filed joint submissions with the Federal Court of Australia, proposing a $450 million penalty over Crown’s breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). A court hearing has been set down for 10–11 July 2023, at which Justice Lee will consider the parties’ proposed settlement.

While AUSTRAC and Crown agree that a $450 million penalty is appropriate in all the circumstances, it is a matter for the court to determine the appropriate penalty.

In reaching this agreement, Crown has admitted that it operated in contravention of the AML/CTF Act, including that Crown Melbourne and Crown Perth:

•    Failed to appropriately assess the money laundering and terrorism financing risks they faced, and to identify and respond to changes in risk over time.

•    Did not have appropriate risk-based systems and controls in their AML/CTF programs to mitigate and manage the money laundering and terrorism financing risks they faced.

•    Failed to establish an appropriate framework for Board and senior management oversight of their AML/CTF programs.

•    Did not have a transaction monitoring program[me] that was appropriate to the nature, size and complexity of their business.

•    Had an enhanced customer due diligence program[me] that lacked appropriate procedures to ensure higher risk customers were subjected to extra scrutiny.

•    Did not conduct appropriate ongoing customer due diligence on a range of specific customers who presented higher money laundering risks.

AUSTRAC Chief Executive Officer, Nicole Rose said the casino sector is at risk of exploitation by organised criminals seeking to clean their dirty money, money which criminals make through the sale of illicit drugs, scams and even human trafficking.

“Crown’s contraventions of the AML/CTF Act meant that a range of obviously high-risk practices, behaviours and customer relationships were allowed to continue unchecked for many years.” Ms Rose said

“Crown has sought to respond to the failures identified in these proceedings by enhancing its approach to ML/TF risk management and investing in its financial crime compliance. We continue to work closely with Crown to ensure that their AML/CTF program[me] and systems are compliant and fit for purpose into the future.”

As the matter is before the court for determination, AUSTRAC is unable to comment further on the proceedings or in principle agreement.

11    In the light of all of the above, it is appropriate to make a few important preliminary observations.

12    First, without in any way criticising the solicitors in the present case, who are all competent and highly experienced, there is a real public interest in regulatory proceedings being conducted with far more alacrity, consistently with the dictates of Pt VB of the Federal Court of Australia Act 1976 (Cth) (FCA Act). A frequent difficulty in proceedings of this type is that proposed orders or agreements are negotiated and workshopped in a way which occasions very considerable delay. This highlights why it is often inappropriate for the Court to acquiesce in delay by making consent orders which punt case management hearings down the road. Case management hearings are not directions hearings. The Court’s role is not to affix wearily a rubber stamp to agreed directions which reflect the stately progress of the litigation. Rather, they are a means by which the Court seeks to understand the nature of the issues, and manage the proceedings consistently with the overarching purpose: see Australian Securities and Investments Commission v AMP Financial Planning Pty Ltd [2018] FCA 1708 (at [4]–[7] per Lee J); Mayfield Development Corporation Pty Ltd v NSW Ports Operations Hold Co Pty Ltd (No 3) [2023] FCA 713 (at [14] per Lee J).

13    Secondly, senior counsel for AUSTRAC was not able to point to any case where AUSTRAC has litigated a contested hearing or advocated for orders different to those proposed by the contravener on a final hearing. Hence, in all cases, it has presented the Court with an agreement struck with the contravener. As I explain in detail below, there are compelling public policy reasons for encouraging agreement in such matters, particularly in promoting predictability and consistency in cases involving regulatory litigants where there is some form of established “tariff” for penal orders; such a course provides an informed basis for assessing comparability and parity of outcome. But like many considerations of public policy, the considerations do not all point in one direction. The fact that agreed orders were accepted by the Court in earlier cases suggests the relevant judge was satisfied that AUSTRAC was not being overly pragmatic in not proceeding to a contested hearing on liability or penalty. On balance, and not without some hesitation, for reasons detailed below, I am similarly satisfied in this case. But it is appropriate to sound a note of caution. If a regulatory body approaches litigation on the basis that it will not run to a contested hearing and always reaches an agreement, it risks being perceived as a soft touch. As I will explain, if the proposed penalty falls within the lower end of a permissible range, the Court will generally accept the proposed penalty even if the Court may have been disposed to select a higher figure. Speaking generally, and without finding that such a criticism can presently be made of AUSTRAC (or Crown for that matter), if a regulator never runs contested hearings and always eventually agrees, a danger arises that a sophisticated contravener will approach negotiations on the basis that it can present obstacles to making admissions, and delay and hold out to secure what they perceive to be the lowest possible permissible figure confident that the regulator will not take them on.

14    Thirdly, agreements of the present type are often justified, correctly, on the basis that they serve to save costs, including for the regulator. But in the present case, the orders provide that Crown is to pay AUSTRAC’s costs of $3.4 million. For all I know the costs may be greater than this sum. What I can say is that it is far from self-evident that if the case had been contested in some respects, including as to penalty, it could not have gotten on before me more quickly and at a comparable cost to AUSTRAC.

15    Fourthly, it is naïve to consider that agreements as to penalty do not sometimes present real challenges at the hearing. The Court is presented with a joint resolution and submissions are made along the lines made here that: “the parties have agreed to a figure of 450 million without interest … that’s the deal that the parties have struck, so we would urge for your Honour – for the [C]ourt not to interfere with that deal” (T73.19–21). Here, an affidavit was filed as to the financial position of Crown in support of oral submissions that a penalty on deferred payment terms was agreed “because [Crown] can’t afford to pay more than what we’ve agreed” (T71.14–15). This was buttressed by the submission that evidence as to the cash and borrowing position of Crown should be accepted because it was not the subject of cross-examination by the regulator (see T69.45). This was in circumstances where aspects of the evidence going to the financial positon of Crown were scant, unsupported by business records, or not addressed. Most notably, there was no evidence as to the past payment of dividends and diminution of retained earnings or the group’s current enterprise value; and only the most superficial evidence of its ability to obtain future, alternative sources of debt capital or additional equity capital.

16    One can easily imagine how this evidence in chief could have led to cross-examination of a chief financial officer as to whether it was correct to say, for example, we can pay no more or, perhaps more accurately given the terms of the evidence adduced, cannot pay now “without significant financial hardship”. Although AUSTRAC in submissions rejected the idea that the paction was struck based on it accessing what Crown could pay (T78.10), as noted above, there was no cross-examination. The reality is that AUSTRAC had become, not unnaturally, a friend of the deal. In other types of cases where this phenomenon presents itself, for example, settlement approvals in class actions, the Court commonly appoints a contradictor which assists in avoiding the Court entering into the fray. With the benefit of hindsight, it may have been prudent to adopt this course, which I raised at the last case management hearing on 12 May 2023 (T3.25; T12.33).

17    Fifthly, and although not presently relevant, I have previously remarked that when these types of agreements dictate future steps to be taken by a contravener as part of the remedial response, or agreement is reached as to how compensation is to be paid, the agreements can often have the practical effect of presenting the Court with a fait accompli: so many costs have been expended, and so much work has been done, that it is difficult for the Court to put in place a different approach: see Australian Securities and Investments Commission v AMP Financial Planning Pty Ltd (No 2) [2020] FCA 69; (2020) 142 ACSR 277 (at 335 [252] per Lee J).

18    Sixthly, the issuing of a press release was foreshadowed to the Court and was appropriate and accurate as far as it went. But what it did not indicate is that an agreement had been struck whereby the proposed penalty is subject to a payment plan over two years. The significance of this, among other things, is that the net present value (NPV) of the proposed penalty today is not $450 million. It is common ground that at the usual and default post-judgment interest rate, assuming no discount, the NPV of the proposed penalty is approximately $405 million. As I noted to the parties at the hearing, one must compare “apples with apples”. In other regulatory proceedings involving AUSTRAC, penal orders were made without a deferred payment plan. Publicity engendered as to the comparability between this proposed penalty and other penal orders was unfortunately confused by such an approach, although I hasten to add I accept this was unintentional.

19    Having made these preliminary points, what follows in these reasons is largely drawn from the joint submissions and the statement of agreed facts and admissions (SAFA). The thoroughness of the joint submissions, the exchange today and yesterday at the oral hearing, and the high degree of co-operation in agreeing upon relevant facts, has allowed me to proceed immediately to the delivery of judgment at the conclusion of the hearing today.

20    I have organised the balance of my reasons as follows:

B    THE RELEVANT FACTS

C    THE ACT AND RULES

D    OVERVIEW OF ADMISSIONS

E    ORDERS SOUGHT BY AGREEMENT

F     THE RELEVANT LAW

G     CONSIDERATION OF THE PROPOSED PENALTY

H     PAYMENT OF THE PENALTY

I    CONCLUSION AND ORDERS

B    THE RELEVANT FACTS

21    The finalised version of the SAFA was admitted into evidence pursuant to s 191 of the Evidence Act 1995 (Cth) (EA) and was marked Exhibit A in the proceeding. I find for the purposes of this proceeding the facts identified in Exhibit A.

22    Also in evidence is the affidavit of Mr Alan Frank McGregor, Chief Financial Officer of Crown Resorts Limited (Crown Resorts), sworn 30 May 2023 (McGregor Affidavit), and a press release issued by AUSTRAC dated 30 May 2023, which was marked Exhibit B in the proceeding, referred to above (at [10]).

23    In this section of my reasons, I summarise and identify some salient aspects of the factual background which emerge from those documents.

B.1    Parties and background

B.1.1    AUSTRAC

24    AUSTRAC is charged with enforcing compliance with the Act and subordinate legislation, including the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (Cth) (Rules). AUSTRAC brings this proceeding in that capacity.

B.1.2    Crown

25    During the period 1 March 2016 to 1 March 2022 (relevant period), Crown Resorts was the ultimate holding company of Crown Melbourne and Burswood Limited, which was the holding company of Crown Perth.

26    Crown Melbourne and Crown Perth during the relevant period provided “designated services” to customers within the meaning of s 6 of the Act, as summarised below. A person who provides a designated service is a “reporting entity” within the meaning of s 5 of the Act.

B.2    Gaming services and financial services

27    Crown offered a range of designated services during the relevant period. The services were provided to customers either as members or non-members of Crown.

B.2.1    Membership

28    Members were able to access “benefits”, including applying for a “Crown Rewards” card, which allowed members to earn points from gaming and other expenditure. These points could be redeemed for gaming or rewards (such as food or beverages). Depending on the level of gaming activity, members could attain different tiers of membership, which offered members access to increasing levels of rewards and certain Crown facilities.

B.2.2    Gaming locations

29    Crown primarily provided gaming services on the main gaming floors, which were accessible to all customers. In addition, both Crown Melbourne and Crown Perth offered private or “VIP” areas to members based on their membership tier.

B.2.3    Gaming types

30    Crown offered a range of games to customers during the relevant period that involved the provision of designated services, namely:

(1)    Table Games – games offered at tables on the main gaming floor and in private rooms, including baccarat, roulette, blackjack, Sic Bo, poker and others;

(2)    Electronic Table Games (ETGs) – semi and fully automated versions of traditional table games, where customers played at terminals; and

(3)    Electronic Gaming Machines (EGMs) – themed games played on electronic machines.

B.2.4    Financial services

31    Throughout the relevant period, Crown offered financial services which facilitated the movement of money in and out of the casino environment, including across international borders.

32    As explained below, accounts were offered to customers to facilitate gaming activity, which, depending on the game played, could be funded by way of cash, cheque, telegraphic transfer, credit or cheque cashing facilities. Gaming activity could also be funded through chips, tokens or betting instruments, also known as “Casino Value Instruments” (CVIs).

The Cage

33    Central to the funding of gaming activity was “the Cage” (Cage), which effectively operated as the “bank” of the casino, and managed the monetary transactions between customers and the casino in relation to gaming.

34    Crown had multiple cashier windows in various locations throughout the venues, at which customers could conduct transactions. The Cage also processed some monetary transactions on behalf of customers remotely.

Crown patron accounts

35    Crown maintained bank accounts for customers (Crown Patron Accounts) in Australian and foreign currencies to facilitate the transfer of funds into the casino. Funds that were deposited into Crown Patron Accounts by or on behalf of customers were recorded on a ledger with reference to a customer’s gaming account.

36    These gaming accounts were known as “deposit accounts” (DABs), which were used for day-to-day casino transactions, and “safekeeping accounts” (SKAs).

37    Crown Patron Accounts facilitated the movement of funds both domestically and internationally. Funds could be deposited into a Crown Patron Account by cash, cheque or telegraphic transfer, in Australian or foreign currency.

38    Customers of Crown could:

(1)    deposit funds personally into a Crown Patron Account;

(2)    arrange for any third-party to deposit funds into a Crown Patron Account (until November 2020, when policies to prohibit third-party transactions began to be introduced);

(3)    instruct certain other casinos (including Australian and foreign casinos) to transfer a customer’s funds from their non-Crown casino account into a Crown Patron Account (until May 2021); and

(4)    instruct another Crown entity to deposit funds into a Crown Patron Account on their behalf.

39    Crown Patron Accounts were used by some third-party entities (such as junket tour operators, remittance service providers and overseas deposit services, as explained below) to make deposits on behalf of Crown customers.

Casino value instruments and card play

40    Customers could use a number of different CVIs to obtain designated services from Crown. These included chips, chip exchange vouchers (CEVs), “ticket-in and ticket-out tickets” (TITOs) and “chip purchase vouchers” (CPVs).

41    Crown also offered forms of “cashless” accounts (named “Card Play” and “Card Play Extra” accounts). These accounts were linked to customers’ “Crown Rewards” cards, and allowed customers, among other things, to transfer funds from their DAB for gaming, among other things.

Credit facilities and other services

42    Crown customers were also offered various credit facilities, which constituted “loans” and designated services within the meaning of the Act.

43    These facilities were variously named “Cheque Cashing Facilities”, “Credit Facilities” or “Funds Advance Facilities” and differed marginally between Crown Melbourne and Crown Perth, but, in essence, allowed domestic or international customers to borrow from Crown up to an agreed credit limit. These facilities were often linked to customers’ DABs.

44    Crown also provided overseas deposit services to customers by way of various international casinos, including casinos in Macau and London. This service allowed a person to deposit funds at the overseas location with the equivalent value being made available for use at Crown. Importantly, the person depositing the funds did not need to be the same person as the customer.

B.3    Junkets

45    During the relevant period, Crown facilitated junket programmes. A junket is an arrangement between a casino and a junket operator that facilitates gambling by one or more high wealth players.

46    For the purposes of this proceeding, it is necessary to note five “platform junkets” (that is, junkets featuring numerous players) operated by the following customers:

(1)    Customer 1, who operated the “Suncity” junket (Suncity Junket);

(2)    Customer 2, who was the operator of the “Song” junket (Song Junket);

(3)    Customer 3, who was the operator of the “Meg-star” junket (Meg-star Junket);

(4)    Person 3 and Customers 6, 7, 8 and 9, who formed a network of junket operators known as the “Neptune” junket (Neptune Junket); and

(5)    Customers 10, 11, 12, 13 and 14, who were junket operators affiliated with the “Chinatown” junket (Chinatown Junket).

47    The relationship between Crown Melbourne or Crown Perth and each junket operator was governed by agreements which, among other things, set out rebates and commissions payable to junket operators.

48    During the relevant period, revenue from designated services provided through junket programmes represented a material source of Crown’s revenues, totalling approximately $1,685,000,000 during the relevant period: McGregor Affidavit (at [36]).

49    As one presumes would be evident to any sentient casino operator, the provision of designated services to customers through junkets involved higher money laundering and terrorist financing (ML/TF) risks compared to other gaming channels. This is because, among other things:

(1)    junket operators and representatives facilitated the provision of certain designated services to junket players, often in high values;

(2)    junket programmes often involved the movement of large amounts of money across borders, and, depending on the specific junket programme, may have involved the use of multiple bank accounts, including by third parties, which could obscure the identities of persons conducting the transactions through junket programmes and the source and ownership of funds of customers;

(3)    inherent to the junket tour operators sector was exposure to some higher ML/TF risk jurisdictions. In particular, there were vulnerabilities associated with jurisdictions with currency flight and gambling restrictions in place as these measures could create demand for covert money remittances which could be exploited by criminal groups;

(4)    junket players generally relied on the junket operators to make their funds available at the casinos, including through credit facilities; and

(5)    the financial arrangements between junket operators and junket players were not disclosed to Crown.

50    In November 2020, the board of Crown Resorts passed a resolution by which it resolved to ban junkets from Crown casinos permanently.

B.4    Knowledge of risks occasioned by junkets

51    Before going further, I should note something about the knowledge of those within Crown of the risk that junkets posed during the relevant period, which emerged during the course of the oral hearing.

52    On the evidence before me, and as I have noted, it was plain as a pikestaff that junkets were highly vulnerable to the risk of ML/TF. Although there is no allegation made that Crown deliberately set out to contravene the Act and Rules, it is clear that senior management within Crown knew of the high-risk posed by junkets, and that the risks were not merely theoretical. Two examples will suffice, first:

… DABs or SKAs held by junket operators or representatives were highly vulnerable to the storage and movement of potentially illicit funds. By no later than June 2018, the Chief Legal Officer of Crown Resorts, who was also the AMLCO for both Crown Melbourne and Crown Perth, was advised that the AML Team in Melbourne infrequently checked for parked monies.

53    And secondly:

… [i]n the six months prior to May 2018, Crown Melbourne gave the AUSTRAC CEO 58 SMRs concerning behaviour in the Suncity Room, relating to transactions totalling $16.8 million. By no later than June 2018, the Chief Legal Officer of Crown Resorts, who was also the AMLCO for both Crown Melbourne and Crown Perth, was briefed on the suspicious activity in the Suncity Room

B.5    Turnover, revenue and profit

54    It is necessary to say something briefly about how the risk posed by certain customers is quantified with reference to the Act and Rules.

55    During the relevant period, certain transactions engaged in by customers were recorded as “turnover”. Total turnover reflects the total amount wagered by customers, and includes the re-betting of winnings. On each occasion that a customer wagers money on a game, a designated service is provided. However, because of the re-betting of winnings, turnover does not represent the total value of money brought into or moved through the casino by the customer.

56    Turnover is nonetheless relevant to quantifying the nature and scale of ML/TF risks posed by junkets and high-risk customers. High turnover provides criminals with the opportunity to mix illicit funds with legitimate funds, thereby increasing ML/TF risk. As will be seen, this is addressed by the Act through the implementation of risk-based procedures, systems and control programmes.

57    Revenue from designated services provided through gaming channels (including junket channels) is a fraction of total turnover, being the aggregate of customer losses after the aggregate of customer wins have been paid out. Revenue in relation to certain customers or customer groups is not instructive of profit resulting from Crown’s dealings with those customers, given that not all costs incurred by Crown are attributed on a customer by customer basis. As a result, it is difficult to calculate the profits to Crown from any particular customer or customer groups.

58    Accordingly, the turnover and revenue figures referenced in these reasons are measured by reference to particular categories of customer during the relevant period, as opposed to turnover and revenue which would not have necessarily arisen had the contraventions by Crown not occurred, the actual extent of which is unknown.

59    I now turn to the relevant statutory regime.

C    THE ACT AND RULES

C.1    Background

60    The objects of the Act are set out in s 3(1), and include fulfilling Australia’s international obligations and addressing matters of international concern relating to combating money laundering and the financing of terrorism. They also include:

(aa)     to provide for measures to detect, deter and disrupt money laundering, the financing of terrorism, and other serious financial crimes; and

(ab)     to provide relevant Australian government bodies and their international counterparts with the information they need to investigate and prosecute money laundering offences, offences constituted by the financing of terrorism, and other serious crimes; and

(ac)     to support cooperation and collaboration among reporting entities, AUSTRAC and other government agencies, particularly law enforcement agencies, to detect, deter and disrupt money laundering, the financing of terrorism, and other serious crimes; and

(ad)     to promote public confidence in the Australian financial system through the enactment and implementation of controls and powers to detect, deter and disrupt money laundering, the financing of terrorism, and other serious crimes …

61    In order to achieve these objects, Parliament enacted a “risk management approach”. That is, the statutory regime does not prescribe the manner in which a reporting entity must manage the ML/TF risks of the designated services it provides to customers. Rather, it involves reposing in the industry a degree of trust for the operation of the risk management system under the Act, breaches of which carry severe penalties: see Chief Executive Officer of Australian Transaction Reports and Analysis Centre v TAB Limited (No 3) [2017] FCA 1296 (at [2]–[4] per Perram J).

C.2    Relevant provisions

C.2.1    Section 81(1)

62    Section 81(1) of the Act provided at all relevant times:

Reporting entity must have an anti-money laundering and counter-terrorism financing program

(1)    A reporting entity must not commence to provide a designated service to a customer if the reporting entity:

(a)     has not adopted; and

(b)     does not maintain;

an anti-money laundering and counter-terrorism financing program that applies to the reporting entity.

63    Section 81(1) has been described as a fundamental and foundational requirement under the Act: Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Westpac Banking Corporation [2020] FCA 1538; (2020) 148 ACSR 247 (at 268 [135] per Beach J). The anti-money laundering and counter-terrorism financing (AML/CTF) programme is the principal document for setting out the risk-based systems and controls that are required to ensure compliance with the Act and Rules. It is one of the means through which a reporting entity fulfils the obligation to take responsibility for managing the ML/TF risks of its own business.

64    An “anti-money laundering and counter-terrorism financing program[me]” is defined in s 83, and includes either a standard, joint or special programme. Each of these programmes has various requirements under the Act, which are relevantly set out in ss 84 and 85, namely:

(1)    section 84(1) of the Act defines a standard AML/CTF programme as a written programme that applies to a particular reporting entity, and is divided into the following parts: Part A (general) and Part B (customer identification);

(2)    section 85(1) of the Act defines a joint AML/CTF programme as a written programme that applies to each reporting entity that from time to time belongs to a particular designated business group, and is divided into the following parts: Part A (general) and Part B (customer identification);

(3)    sections 84(2)(a) and (c) and 85(2)(a) and (c) of the Act define Part A of a standard or joint AML/CTF programme, respectively, as a part the primary purpose of which is to identify, mitigate and manage the risk a particular reporting entity may reasonably face that the provision by the reporting entity of designated services might (whether inadvertently or otherwise) involve or facilitate ML/TF and that complies with the Rules; and

(4)    sections 84(3)(a) and (b) and 85(3)(a) and (b) of the Act defines Part B of a standard or joint AML/CTF programme, respectively, as a part the sole or primary purpose of which is to set out the applicable customer identification procedures (ACIPs) and that complies with the Rules.

65    Section 81(1) is a civil penalty provision: s 81(2) of the Act. The operation of the above definitional provisions means that s 81(1) is contravened each time a reporting entity commences to provide a designated service to a customer while its programme is not in a proper condition.

C.2.2    Section 36(1)

66    Section 36(1) of the Act provided at all relevant times:

Ongoing customer due diligence

(1)     A reporting entity must:

(a)     monitor the reporting entity's customers in relation to the provision by the reporting entity of designated services at or through a permanent establishment of the reporting entity in Australia, with a view to:

(i)     identifying; and

(ii)     mitigating; and

(iii)     managing;

the risk the reporting entity may reasonably face that the provision by the reporting entity of a designated service at or through a permanent establishment of the reporting entity in Australia might (whether inadvertently or otherwise) involve or facilitate:

(iv)     money laundering; or

(v)     financing of terrorism; and

(b)     do so in accordance with the AML/CTF Rules.

67    In addition to comprising an overarching obligation, the requirements in s 36(1) of the Act are to be conducted in accordance with the Rules, including the requirements set out in Ch 15 of the Rules. In broad outline, the Rules require reporting entities to include in their Part A programmes, and to maintain, risk-based systems and controls in relation to:

(1)    “Know your customer” (KYC) and beneficial owner information: rr 15.2–15.3 of the Rules;

(2)    a transaction monitoring programme designed, inter alia, to facilitate identification of suspicious matters for the purposes of s 41 of the Act: rr 15.4–15.7 of the Rules; and

(3)    an enhanced customer due diligence programme (ECDD programme) to be applied to customers when identified risk-based triggers occur in relation to customers: rr 15.8–15.11 of the Rules.

68    Section 36(1) is a civil penalty provision: s 36(2) of the Act.

C.3    AML/CTF programmes and risk management

69    As noted above, the Act does not mandate how particular ML/TF risks are to be managed. Rather, in determining what risk management procedures, systems and controls are appropriate for its AML/CTF programme, the Act and Rules require a reporting entity to take into account certain matters.

70    These matters are set out in Ch 8 and 9 of the Rules, and relevantly include:

(a)     the nature, size and complexity of its business; and

(b)    the ML/TF risks it reasonably faces, having regard to:

(i)     the type of designated services it provides;

(ii)     the type of customers it provides designated services to;

(iii)     the methods through which it delivers designated services (known as channels); and

(iv)     the foreign jurisdictions with which they deal.

71    An AML/CTF programme will not include appropriate risk-based procedures, systems and controls that meet the requirements of the Act and Rules if: (1) it has not taken the matters set out above (at [70]) into account; and (2) the procedures, systems and controls are not aligned and proportionate to the ML/TF risks reasonably faced, having regard to the matters set out above (at [70(b)]).

72    The Act and Rules require reporting entities to have regard to the matters above (at [70]) when determining what ongoing customer due diligence is appropriate for the purposes of s 36(1) of the Act. The Rules also prescribe some minimum elements that must be included in an AML/CTF programme, including transaction monitoring and an ECDD programme.

D    OVERVIEW OF ADMISSIONS

73    Crown has admitted contraventions of ss 81(1) and 36(1) of the Act, which may be summarised as follows:

Contraventions of s 81(1) – providing designated services without an anti-money laundering and counter-terrorism financing programme (AML/CTF programme) that complied with the Act and the Anti-Money Laundering and Counter- Terrorism Financing Rules Instrument 2007 (No.1) (Rules). Crown Melbourne and Crown Perth each admits that it contravened s 81(1) of the Act each time it commenced to provide a designated service during the period 1 March 2016 to 1 March 2022 (relevant period) in circumstances where:

(i)    from 1 March 2016 to 1 November 2020, Part A of the standard AML/CTF programmes did not:

1.    have the primary purpose of identifying, mitigating and managing the risk that Crown Melbourne and Crown Perth may reasonably face that the provision of designated services at or through a permanent establishment of either entity in Australia might (whether inadvertently or otherwise) involve or facilitate money laundering or terrorism financing (ML/TF), as required by s 84(2)(a) of the Act; and

2.    comply with s 84(2)(c) of the Act, which required that Part A of a standard AML/CTF programme comply with the Rules;

(ii)    from 1 March 2016 to 1 November 2020, Part B of the standard AML/CTF programmes did not comply with s 84(3)(b) of the Act, which required that Part B of a standard AML/CTF programme comply with the Rules;

(iii)    from 2 November 2020 to 1 March 2022, Part A of the joint AML/CTF programme did not:

1.     have the primary purpose of identifying, mitigating and managing the risk that Crown Melbourne and Crown Perth may reasonably face that the provision of designated services at or through a permanent establishment of either entity in Australia might (whether inadvertently or otherwise) involve or facilitate ML/TF, as required by s 85(2)(a) of the Act; and

2.    comply with s 85(2)(c) of the Act, which required that Part A of a joint AML/CTF programme comply with the requirements of the Rules, on the basis that not all of the underlying systems and controls (through which Part A of the joint AML/CTF programme was to be operationalised), had yet been fully adopted and implemented; and

(iv)    from 2 November 2020 to 1 March 2022, Part B of the joint AML/CTF programme did not comply with s 85(3)(b) of the Act, which required that Part B of a joint AML/CTF programme comply with the Rules.

Contraventions of s 36(1) – failure to carry out ongoing customer due diligence:

(i)    Crown Melbourne admits that during the relevant period, it contravened s 36(1) of the Act on 380 occasions by failing to monitor 380 customers in relation to the provision of designated services:

1.    with a view to identifying, mitigating and managing the ML/TF risks that Crown Melbourne reasonably faced; and

2.    in accordance with Chapter 15 of the Rules.

(ii)    Crown Perth admits that, during the relevant period, it contravened s 36(1) of the Act on 166 occasions by failing to monitor 166 customers in the same respects.

74    The parties jointly submit that a penalty of $450 million, paid in three instalments over two years, is an appropriate penalty. It is said that this amount will achieve the twin objectives of specific and general deterrence, having regard to the nature and seriousness of the contravening conduct engaged in by Crown.

75    Subject to matters to which I will return, I have concluded that the proposed penalty of $450 million is within the range of penalties necessary to achieve the object of specific and general deterrence. Before going further, however, it is necessary to say something about the proper approach to orders sought by agreement.

E    ORDERS SOUGHT BY AGREEMENT

76    In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482, the High Court affirmed the practice of the Court acting upon agreed penalty submissions approved in earlier decisions of the Full Court of this Court. The proper approach to penalties sought by agreement was also recently canvassed by the Full Court in Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; (2021) 284 FCR 24.

77    The relevant principles may be summarised as follows.

78    First, as touched on above, there is an important public policy involved in promoting predictability of outcomes in civil penalty proceedings. The practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers. This encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation: Commonwealth v Director (at 503–504 [46] per French CJ, Kiefel, Bell, Nettle and Gordon JJ).

79    Secondly, in contrast to criminal proceedings, there is generally very considerable scope in civil penalty proceedings for the parties to agree on the facts and upon consequences. There is also scope for parties to agree upon the appropriate remedy and for the Court to be persuaded that it is an appropriate remedy. As the High Court explained in Commonwealth v Director, it is entirely consistent with the nature of civil penalty proceedings for the Court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the Court is persuaded that what is proposed is appropriate (at 507 [57] per French CJ, Kiefel, Bell, Nettle and Gordon JJ); Australian Securities and Investments Commission v Commonwealth Bank of Australia [2021] FCA 423 (at [7] per Lee J).

80    Thirdly, subject to the Court being sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the penalty proposed is an appropriate remedy in all the circumstances, it is consistent with principle and highly desirable in practice for the Court to accept the parties’ proposal and impose the proposed penalty. The Court asks whether their proposal can be accepted as fixing an appropriate amount and for that purpose the Court must satisfy itself that the submitted penalty is appropriate: Commonwealth v Director (at 504 [48] per French CJ, Kiefel, Bell, Nettle and Gordon JJ).

81    Fourthly, the regulator in a civil penalty proceeding is not disinterested. That consideration supports, rather than detracts from, the propriety of the Court receiving joint submissions as to facts and penalty and imposing the proposed penalty if persuaded that it is appropriate. It is the function of the relevant regulator to regulate the industry in order to achieve compliance. Accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance, albeit that such submissions will be considered on their merits in the ordinary way: Commonwealth v Director (at 508 [60] per French CJ, Kiefel, Bell, Nettle and Gordon JJ); see also Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59; (2015) 229 FCR 331 (at 376 [139] per Dowsett, Greenwood and Wigney JJ).

82    Fifthly, as the Full Court noted in Volkswagen Aktiengesellschaft (at 44–46 [124]–[131] per Wigney, Beach and O’Bryan JJ), in considering whether the agreed and jointly proposed penalty is an appropriate penalty, it is necessary to bear in mind that there is no single appropriate penalty. Rather, there is a permissible range of penalties within which no particular figure can necessarily be said to be more appropriate than another. The permissible range is determined by all the relevant facts and circumstances.

83    Sixthly, the Court should generally recognise that an agreed proposed penalty is most likely the result of compromise on the part of the regulator and reflects the regulator’s considered estimation of the penalty necessary to achieve the objective of deterrence and the risks and expenses of the litigation had the proceeding not been settled: Volkswagen Aktiengesellschaft (at 45 [129] per Wigney, Beach and O’Bryan JJ).

84    Seventhly, as again touched on above, if the proposed penalty falls within the permissible or acceptable range, the public policy consideration of predictability of outcome will generally provide a compelling reason for the Court to accept the proposed penalty. Further, the Court will not depart from the submitted figure “merely because it might otherwise have been disposed to select some other figure” if it is within the permissible range: Commonwealth v Director (at 504 [47] per French CJ, Kiefel, Bell, Nettle and Gordon JJ); Volkswagen Aktiengesellschaft (at 45–46 [131] per Wigney, Beach and O’Bryan JJ).

85    Finally, and importantly however, as Foster J noted in Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft [2019] FCA 2166 (referring to the reasoning of Keane J in Commonwealth v Director (at 523–524 [194])), the Court should not be too ready to accept submissions and penalties agreed to by a regulator who was being “overly pragmatic”: the overriding obligation on the part of the Court is to fix a penalty that is appropriate: see also Volkswagen Aktiengesellschaft (at 420 [83], 427 [129] per Wigney, Beach and O’Bryan JJ). In other words, the mere fact that the Court is dealing with an agreed penalty does not undercut the discretion conferred: the Court’s focus is on whether the penalty falls within the appropriate range to achieve specific and general deterrence. Contrary to the submissions of Crown, close interrogation of the proposed agreement, and rejecting it if necessary, amounts to the proper discharge of the judicial function.

86    It is worth adding that these principles are not confined to pecuniary penalties but apply equally to agreement as to other forms of relief. The High Court’s conclusions in Commonwealth v Director regarding the desirability of acting upon agreed penalties were made in the context of its broader recognition that civil penalties are but one of numerous forms of relief which regulators may pursue as civil litigants (at 495 [24], 507 [57]–[59], 509 [63] per French CJ, Kiefel, Bell, Nettle and Gordon JJ; 521 [103] and 522–523 [107] per Keane J).

F    THE RELEVANT LAW

F.1    Section 175

87    The Court’s power to impose a pecuniary penalty under the Act is found in s 175. It is necessary to set out that section in full:

175    Civil penalty orders

(1)     If the Federal Court is satisfied that a person has contravened a civil penalty provision, the Federal Court may order the person to pay the Commonwealth a pecuniary penalty.

(2)     An order under subsection (1) is to be known as a civil penalty order.

Determining amount of pecuniary penalty

(3)     In determining the pecuniary penalty, the Federal Court must have regard to all relevant matters, including:

(a)     the nature and extent of the contravention; and

(b)     the nature and extent of any loss or damage suffered as a result of the contravention; and

(c)     the circumstances in which the contravention took place; and

(d)     whether the person has previously been found by the Federal Court in proceedings under this Act to have engaged in any similar conduct; and

(e)     if the Federal Court considers that it is appropriate to do so–whether the person has previously been found by a court in proceedings under a law of a State or Territory to have engaged in any similar conduct; and

(f)     if the Federal Court considers that it is appropriate to do so–whether the person has previously been found by a court in a foreign country to have engaged in any similar conduct; and

(g)     if the Federal Court considers that it is appropriate to do so–whether the person has previously been found by a court in proceedings under the Financial Transaction Reports Act 1988 to have engaged in any similar conduct.

Maximum pecuniary penalty

(4)     The pecuniary penalty payable by a body corporate must not exceed 100,000 penalty units.

(5)     The pecuniary penalty payable by a person other than a body corporate must not exceed 20,000 penalty units.

Conduct contravening more than one civil penalty provision

(6)     If conduct constitutes a contravention of 2 or more civil penalty provisions, proceedings may be instituted under this section against a person in relation to the contravention of any one or more of those provisions. However, the person is not liable to more than one pecuniary penalty under this section in respect of the same conduct.

Civil enforcement of penalty

(7)     The pecuniary penalty is a civil debt payable to the Commonwealth. The Commonwealth may enforce the civil penalty order as if it were an order made in civil proceedings against the person to recover a debt due by the person. The debt arising from the order is taken to be a judgment debt.

88    In the following section, I will canvass some critical principles, before turning to the mandatory considerations required by s 175(3) and some matters of particular relevance to this case.

F.2    General principles

89    In Australian Securities and Investments Commission v GetSwift Limited (Penalty Hearing) [2023] FCA 100, I summarised the foundational principles with respect to the imposition of pecuniary penalties, as distilled by the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 96 ALJR 426. As I noted then (at [36]), although the High Court’s decision concerned s 546 of the Fair Work Act 2009 (Cth), the observations of the plurality have since been applied to analogous civil penalty regimes.

90    The relevant principles may be summarised as follows.

91    First, subject to the relevant statutory scheme, the primary (if not sole) purpose of a civil penalty is the promotion of the public interest in compliance with the provisions of the Act in question by the deterrence of further contraventions of that Act: ABCC v Pattinson (at 431 [9] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). Retribution, denunciation and rehabilitation have no part to play in the imposition of a civil penalty.

92    Secondly, the use of the word “may” in s 175(1) of the Act confers a discretion upon the Court: Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1 (at 165 [748] per Giles JA). Accordingly, as with any discretionary power conferred by statute, the discretion is to be exercised judicially, having regard to the subject matter, scope and purpose of the legislation: ABCC v Pattinson (at 437 [40] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ).

93    Thirdly, the process of fixing the quantum of a penalty is one of “instinctive synthesis”: Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25 (at 37–38 [44] per Jagot, Yates and Bromwich JJ). The Court is not unanchored, however, as there must be some reasonable relationship between the theoretical maximum and the final penalty imposed: ACCC v Reckitt Benckiser (at 63 [156] per Jagot, Yates and Bromwich JJ)). The following factors have emerged as possible relevant considerations, but not a “rigid catalogue” (Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 (at 580 [91] per Buchanan J); ABCC v Pattinson (at 433 [18] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ)), and were summarised by French J in Trade Practices Commission v CSR Limited (1991) ATPR ¶41-076 (at 52,152–53) as follows:

(1)     The nature and extent of the contravening conduct.

(2)     The amount of loss or damage caused.

(3)     The circumstances in which the conduct took place.

(4)     The size of the contravening company.

(5)     The degree of power it has, as evidenced by its market share and ease of entry into the market.

(6)     The deliberateness of the contraventions and the period over which it extended.

(7)     Whether the contravention arose out of the conduct of senior management or at a lower level.

(8)     Whether the company has a corporate culture conducive to compliance with the [Act in question], as evidenced by educational program[me]s or other corrective measures in response to an acknowledged contravention.

(9)     Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the [Act in question] in relation to the contravention.

94    As I said in GetSwift (at [40]), the need to avoid adopting a checklist approach has been brought into even sharper focus following ABCC v Pattinson. The overriding need to focus on what is necessary for specific and general deterrence is the key, and the above matters are important insofar as they inform the remedial response necessary to secure the objects of deterrence.

95    Fourthly, and importantly in the context of this case, the Court must arrive at a figure with a view to ensuring the penalty is not such as to be regarded as “an acceptable cost of doing business”: ABCC v Pattinson (at 433 [17] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 (at 659 [66] per French CJ, Crennan, Bell and Keane JJ), citing Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 (at 265 [63] per Keane CJ, Finn and Gilmour JJ). Persons engaged in trade and commerce must be deterred from the “cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention”: Singtel Optus v ACCC (at 265 [63] per Keane CJ, Finn and Gilmour JJ).

96    Fifthly, careful attention to the maximum penalty may be required because, balanced with all other relevant factors, it provides a yardstick: ABCC v Pattinson (at 440 [52]–[54] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ).

97    Sixthly, three principles commonly utilised in criminal sentencing can also inform the Court’s arrival at a penalty figure.

98    The first is the so-called “course of conduct” or “one transaction” principle. That is, where conduct engaged in by an offender may technically comprise a number of separate offences, but that conduct can fairly be characterised as a single act or course of conduct, the sentences imposed should be attuned to reflect that fact and avoid double punishment: Australian Competition and Consumer Commission v Yazaki [2018] FCAFC 73; (2018) 262 FCR 243 (at 294–295 [227]–[229] per Allsop CJ, Middleton and Robertson JJ).

99    The second is the “totality” principle, which requires the Court to look at the entirety of the offending and determine the most appropriate sentence for all the offences taken together: Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd [2019] FCA 786; (2019) 370 ALR 637 (at 691 [240]–[241] per Perram J).

100    The third is that parity and equal justice are relevant factors in determining the appropriate penalty: Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714; (2009) 259 ALR 116 (at 173 [319]–[322] per Gzell J); Australian Securities and Investments Commission v Flugge (No 2) [2017] VSC 117; (2017) 342 ALR 478 (at 491 [69]–[72] per Robson J). Ultimately, however, each case turns on its facts, so a review of penalties imposed in past cases is of limited utility.

101    There are, of course, limits to the “transplantation” of principles governing criminal sentencing to civil penalty regimes. The focus must be on the promotion of the public interest in compliance with the relevant statutory norms by specific and general deterrence. The only “proportionality” which falls for consideration is the need to strike a “reasonable balance between deterrence and oppressive severity”: ABCC v Pattinson (at 437–438 [41] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ).

F.3    Mandatory considerations

102    As noted above, in addition to the requirement that the Court have regard to “all relevant matters” in determining whether a penalty is within the appropriate range, s 175(3) of the Act sets out a non-exhaustive list of matters to which the Court must have regard.

103    Two immediate observations may be made about s 175(3).

104    First, although the section directs the Court to “have regard to” the matters to which it refers, the weight, if any, to be given to those matters in the circumstances of the particular case is left to the discretion of the Court, informed by the general principles outlined above. In TAB Limited (No 3) (at [9]–[10]), Perram J considered that these matters include (or may include depending on the circumstances) the “French factors” (see above at [93]), which broadly overlap with the matters to which the Court must have regard under s 175(3) of the Act.

105    Secondly, the matters in s 175(3) are properly understood as matters that may inform the ultimate object of deterrence in imposing a civil penalty. The primary object of deterrence in this context as affirmed by the High Court has been applied by other judges of this Court at first instance, and by the Full Court, in circumstances where the statute in question was substantively similar to the terms of s 175(3): see, for example, viagogo AG v Australian Competition and Consumer Commission [2022] FCAFC 87; Australian Securities and Investments Commission v Squirrel Superannuation Services Pty Ltd [2022] FCA 702.

106    Before turning to considering the proposed penalty, it is necessary to say something about two matters of particular relevance to this case.

F.4    Loss or damage suffered as a result of the contravention and indicia of profit

107    Section 175(3)(b) requires the Court to assess the nature and extent of any loss suffered as a result of the contravention. That formulation is significant in the present case because on the evidence before me, it is very difficult to estimate, let alone determine, the loss or damage caused, or the profit obtained by Crown, by reason of the contravening conduct.

108    This is said to be for three reasons.

109    First, the key harm arising from a failure to manage the risk of ML/TF is the creation of the opportunity for such risks to be realised and go undetected. The extent to which risks that Crown failed to manage appropriately were in fact realised cannot be determined because those failures undermined the capacity for the risks to be detected in the first place. Secondly, and relatedly, it is difficult to quantify the revenue or profits obtained by Crown by reason of the contravening conduct because it would involve making retrospective assumptions about how Crown would have managed the risk of ML/TF at various points in time. Thirdly, ML/TF, by its very nature, exposes the Australian community and financial system to loss or damage that extends beyond the amount of money laundered or used to finance terrorism.

110    At first glance, it might be thought that the Court faces some difficulties in discharging its statutory function in fixing a penalty that is within the appropriate range in circumstances where it is in the dark about first, the extent of the loss caused by the wrongful conduct; and secondly, what are the profits obtained by reason of the wrongful conduct. Related to this second point is an added complication: the Court’s focus in fixing a penalty must be upon specific and general deterrence: ABCC v Pattinson (at 431 [9] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). But how does the Court fasten upon a view as to deterrence in circumstances where the profits obtained by Crown as a result of the wrongful conduct are, at least on the present evidence, unknown?

111    While there is no direct authority, there are decisions of this Court which have addressed the issue in the context of an analogous penalty regime under the Australian Consumer Law (as contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (ACL).

112    In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330; (2015) 327 ALR 540, Allsop CJ dealt with an application for the imposition of a penalty under s 224 of the ACL, which, relevantly, requires the Court to have regard to all relevant matters including, among other things, the “nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission” (cf s 175(3)(b) of the Act). In that case, the nature of the contravening conduct engaged in by Coles was such that it was not possible to quantify the loss suffered by consumers.

113    There, the Chief Justice referred to the reasoning of Perram J in Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2011] FCA 382; (2011) 279 ALR 609. In that decision, his Honour noted (at 627 [77]–[79]) that as a matter of “commonsense”, in circumstances where it is easy to imagine detriment to consumers, in the absence of any evidence, the respondent is entitled to be sentenced on the basis that the contravening conduct did not cause harm. The Chief Justice distinguished MSY Technology on the basis that (at 554 [57]):

The “commonsense” nature of his Honour’s suggestion is, with respect, far more apposite to a case such as the one before his Honour than it is in the present. It would be simple enough to adduce evidence of consumers who paid for additional warranties or who incurred expenses in the belief that they were not entitled to a warranty. The circumstances of that case were such that the misleading or deceptive conduct could clearly have a quantifiable and ascertainable pecuniary consequence for consumers. Here, the ACCC did not contend that the quality of the par-baked products was of any lower standard than goods baked from scratch. The primary source of any loss or damage to consumers was of a non-pecuniary nature. The fact that they had lost the opportunity to make a different purchasing choice that they may have made had they been provided with accurate information about the goods they were purchasing. In light of the period of time over which the conduct took place, I am not prepared to sentence on the basis that no one was in fact misled by Coles’ conduct.

(Emphasis added).

114    Recently, in Australian Competition and Consumer Commission v Booktopia Pty Ltd [2023] FCA 194, Burley J considered an application under s 224 of the ACL for the imposition of a penalty in circumstances where a retailer, Booktopia Pty Ltd (Booktopia), had made false or misleading representations relating to notification requirements, returns and refunds. His Honour noted that notwithstanding that the loss suffered by consumers, or the profit gained by Booktopia, could not be determined, it was possible to infer that the wrongful conduct may have caused harm. As his Honour noted (at [41]):

… The confidential evidence tendered indicates that millions of consumers purchased products from Booktopia during that period and tens of thousands of people visited the Terms of Business on the website. However, the parties agree that the value of any benefit obtained by Booktopia – or the loss suffered by consumers – that could reasonably be attributed to the contraventions cannot be determined. The latter is because it is not possible to identify how many consumers may have been dissuaded from pursuing their consumer guarantee rights under the ACL after viewing the Terms of Business. Nonetheless, I infer that the contravening conduct may have caused widespread consumer harm.

(Emphasis added).

115    Although analogues can only be taken so far, there is no reason in principle why the present position should be different. In this case, as in ACCC v Coles, the nature of the loss or damage caused by conduct in contravention of the Act is non-pecuniary. The failure to implement an appropriate programme for managing the risk of ML/TF hinders the ability of law enforcement to investigate and prosecute serious crimes: see AUSTRAC v Westpac (at 274–275 [172]–[179] per Beach J).

116    The contravening conduct engaged in by Crown occurred over a period of approximately six years. For reasons I explain below, I infer that the contravening conduct engaged in by Crown caused not insignificant loss or damage to the Australian community and financial system.

117    As to the profit or benefit obtained by Crown, it has been suggested that the requirements of specific deterrence demand that there be some relationship between the penalty imposed and the profit obtained by reason of the contravening conduct: see, for example, Singtel Optus v ACCC (at 265 [62]–[63] per Keane CJ, Finn and Gilmour JJ); ACCC v Coles (at 562 [100] per Allsop CJ). As the Full Court observed in Volkswagen v ACCC (at 431 [149] per Wigney, Beach and O’Bryan JJ), however, those cases should not be construed as laying down an “immutable principle” that in fixing a penalty that is within the range of penalties that will secure the object of deterrence, the Court must necessarily have regard to the amount of profits derived from the contravention or contraventions. Indeed, in AUSTRAC v Westpac and TAB Limited (No 3), the Court fixed a penalty without quantifying the benefit enjoyed by the contravener by reason of the contraventions.

118    To the extent it matters, notwithstanding its attendant difficulties, I am not persuaded it is impossible to quantify in some meaningful way the profits obtained by Crown by reason of the contravening conduct. It may be accepted that this would involve looking back over the relevant period and making assumptions about what risk management decisions Crown may or may not have made. But what is clear is that a material source of Crown’s revenue was sourced from junkets which were known vehicles for ML/TF. This accords with common sense. As I explain below, the turnover and revenue generated by junkets has been estimated, and provides some (although I suspect quite rubbery) indicative figures of profit which is relevant to determining whether the proposed penalty is within the appropriate range.

F.5    Number of contraventions and maximum penalty per contravention

119    Another matter of significance is the relevance of the maximum penalty under the Act.

120    Section 175(4) of the Act provides that the maximum pecuniary per contravention is 100,000 penalty units for a body corporate. The table below sets out the maximum penalty per contravention in the periods of time covering the timeframe of the contraventions:

121    Although the Court will ordinarily have regard to the maximum penalty, as noted above, it should be treated as but one yardstick that ordinarily must be applied, among a number of relevant factors to inform the assessment of a penalty that is within the range in order to achieve deterrence: ACCC v Reckitt Benckiser (at 63 [155]–[156] per Jagot, Yates and Bromwich JJ); ABCC v Pattinson (at 440 [52]–[54] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ).

122    Where the Court is faced with a vast number of contraventions, the approach has been to determine the penalty with reference to an understanding of the extent to which there was a certain number of courses of conduct leading to those contraventions: ACCC v Coles (at 546 [18] per Allsop CJ).

123    In circumstances where the contraventions are so numerous as to be no longer meaningful, however, in fixing a penalty that is within the appropriate range, the Court should have regard to other factors. As the Full Court noted in ACCC v Reckitt Benckiser (at 63 [157] per Jagot, Yates and Bromwich JJ):

In this case, the theoretical maximum was in the trillions of dollars (some 5.9 million contraventions at $1.1 million per contravention). By way of example only, even if the appropriate penalty per contravention for each sale was $1, the penalty would approach $6 million. It follows that the assessment of the appropriate range for penalty in the circumstances of this case is best assessed by reference to other factors, as there is no meaningful overall maximum penalty given the very large number of contraventions over such a long period of time.

124    Here, it is very difficult, if not impossible, to calculate a total theoretical penalty for all of Crown’s contraventions. This is because a contravention of s 81(1) of the Act occurs each time a reporting entity commences to provide a designated service in circumstances where it does not have a compliant AML/CTF programme. As a result, the number of times Crown contravened s 81(1) is too numerous to quantify. Coupled with the maximum penalty that can be imposed in respect of a single contravention, the total maximum penalty becomes so vast as to make precise calculation meaningless. In such circumstances, potential excesses in the applicable penalty have been addressed by this Court by application of the course of conduct and totality principles referred to above.

125    Crown’s contraventions of s 36(1) of the Act, however, are possible to quantify, and amount to 546 admitted contraventions involving a failure to monitor customers in relation to the provision of designated services, with a view to identifying, mitigating and managing ML/TF risk. These contraventions variously spanned specified periods within the relevant period, or the whole of the relevant period (the maximum penalty for which ranged from $18 million to $22.2 million).

G    CONSIDERATION OF THE PROPOSED PENALTY

126    It is appropriate to commence an assessment of whether the proposed penalty is within the appropriate range by reference to each of the matters to which I must have regard under s 175(3) of the Act, before turning to some more general matters.

127    In doing so, I should reiterate that s 175(3) does not require me to form a view as to the weight, if any, to be given to the matters to which it directs the Court to have regard. Properly understood, those matters are matters which inform the primary, if not sole, object of specific and general deterrence.

G.1    Nature and extent of the contraventions and the circumstances in which they occurred (ss 175(3)(a) and 175(3)(c))

128    It is appropriate to deal with these matters together.

129    The nature and extent of the contraventions, the circumstances in which they took place and the resulting loss and damage has been summarised above and in the SAFA.

130    The contraventions were systemic, longstanding and egregious; permeating every designated service provided by Crown. By reason of the contravening conduct, the risks of ML/TF were high. As noted above, the vulnerability of the casino industry to such risks was obvious and the subject of typologies and guidance published by relevant authorities, including AUSTRAC (see SAFA, Schedule 2).

131    The joint position is that none of Crown’s contraventions of s 81(1) were the product of any deliberate intention to contravene the Act. This leaves the question unanswered, which AUSTRAC does not appear willing to address directly, as to what was the reason all of this happened? The likely answer would not have been too hard to find out at a hearing (and I have my suspicions) but I have to deal with the circumstances gleaned from the evidence and eschew speculation. I will do so, noting that having regard to the fundamental and foundational character of the obligation imposed by s 81(1), it has been held that the absence of a deliberate intention to breach does not carry significant weight: AUSTRAC v Westpac (at 268 [135] per Beach J). But this lacuna is presently troubling as it is ordinarily highly relevant to the disposition of applications of this kind to assess the extent to which the contravention was the result of deliberate, covert or reckless conduct, which is a matter which informs the seriousness of the contravening conduct: ASIC v AMP (No 2) (at 317–318 [160] per Lee J); CSR Limited (at 52,152–52,153 per French J).

132    I have already explained the extent to which those within Crown knew, or ought to have been aware, that junkets and other high-risk gaming activities exposed it to ML/TF (at [45]–[53]). On the evidence before me, the conclusion is that while I must accept (given the forensic choices of AUSTRAC) there was no actual intention to breach the Act or Rules, there was a fundamental lack of regard by senior management for the risk posed by junket activity.

133    I have also already described the contravening conduct as egregious. It exposed Crown, its financial partners and the broader financial system to the risk of exploitation by organised crime, and undermined the capacity of law enforcement to identify and respond to those risks, which placed the broader Australian community at risk.

134    Without being exhaustive, the following section sheds some light on the nature and seriousness of the contravening conduct.

G.1.1    Section 81(1) contraventions

135    During the relevant period, Crown’s AML/CTF programmes did not meet the following requirements.

136    First, the Part A programmes did not have the primary purpose of identifying, mitigating and managing ML/TF risks reasonably faced: ss 84(2)(a) and 85(2)(a) of the Act.

137    Secondly, the Part A programmes did not fully meet the requirements of Ch 8, 9 and 15 of the Rules, including with respect to transaction monitoring, enhanced customer due diligence and reporting of certain transactions and matters to AUSTRAC.

138    Thirdly, the Part B programmes did not fully meet the requirements of Ch 4 of the Rules.

139    I will deal with each in turn.

Part A programmes – Primary Purpose

140    From 1 March 2016 to November 2020, Crown’s standard Part A programmes did not have the primary purpose of identifying, mitigating and managing ML/TF risks reasonably faced by Crown.

141    This is for the following reasons.

142    First, the programmes did not refer to or incorporate a written ML/TF risk assessment methodology that is capable of appropriately identifying and assessing the ML/TF risks of all designated services provided by a reporting entity.

143    Secondly, the programmes were not aligned to the ML/TF risks reasonably faced by Crown with respect to designated services, as periodically assessed in accordance with an appropriate ML/TF risk assessment methodology. Crown did not appropriately identify and assess the well known ML/TF risks and typologies. Nor did its programmes include an appropriate ML/TF risk methodology to consistently assess these risks; nor did they include appropriate risk-based systems and controls that were aligned to all of these risks and typologies.

144    Thirdly, the programmes did not include or establish an appropriate framework for approval and oversight by board and senior management. Between November 2018 and November 2020, Crown Melbourne’s standard Part A programmes were not approved by the Crown Melbourne board as required by r 8.4.1 of the Rules. Between March 2016 and November 2020, Crown Perth’s standard Part A programmes were not approved by the Crown Perth board as required by r 8.4.1 of the Rules.

145    Further, with respect to the ongoing oversight of the standard Part A programmes:

(1)    there was incomplete and ad hoc reporting to the Crown Melbourne and Crown Perth boards and senior management with respect to AML/CTF compliance and the identification, mitigation and management of ML/TF risk reasonably faced by Crown;

(2)    neither the Crown Melbourne board nor the Crown Perth board determined ML/TF risk appetite for the purposes of the standard Part A programmes;

(3)    neither the Crown Melbourne board nor the Crown Perth board had a documented process in place to ensure discussion of ML/TF risk as against measurable criteria at regular intervals;

(4)    neither Crown Melbourne nor Crown Perth completed an independent review that satisfied all of the requirements of r 8.6.5 of the Rules which are for the purposes of assessing the Part A programme’s compliance and effectiveness; and

(5)    there was a lack of clarity and understanding within Crown as to reporting lines to and from senior management and the roles and accountabilities with respect to ML/TF risk management and compliance.

146    Fourthly, the programmes did not include appropriate risk-based systems and controls that were capable (as a matter of system or control design) of identifying, mitigating and managing ML/TF risks reasonably faced by the reporting entity, consistent with risk appetite. In particular, Crown’s standard Part A programmes did not include appropriate risk-based controls with respect to designated services provided through junket channels. From 1 March 2016 until August 2020, Crown provided a range of designated services to customers through junket channels which involved complex transaction chains, but did not appropriately identify, mitigate or manage the associated ML/TF risks. Notwithstanding the higher ML/TF risks, the controls in the standard Part A programmes that applied to the provision of designated services through junkets were generally no different to the controls applied to other customers. The standard programmes did not address the more acute risks associated with junkets. Nor did Crown include appropriate risk-based systems and controls in its standard Part A programmes with respect to designated services provided through overseas deposit services. Crown provided designated services through overseas deposit channels, but did not appropriately identify, mitigate or manage the associated ML/TF risks.

Part A programmes – Chapters 8, 9 and 15 of the Rules

147    Crown’s standard Part A programmes did not meet the requirements of the Rules from March 2016 to November 2020, including for the following reasons.

148    First, the transaction monitoring programme maintained by Crown was not aligned to an appropriate ML/TF risk assessment; did not appropriately cover all financial and gaming designated services provided by Crown; and was not capable of detecting all well known ML/TF typologies and vulnerabilities faced by casinos. Transaction monitoring processes were predominantly manual and subject to significant deficiencies in information management systems and in the resourcing of the AML/CTF compliance function, such that it was incapable of appropriately detecting unusual or suspicious transactions, given the nature, size and complexity of Crown’s business. Crown’s transaction monitoring programme was not subject to appropriate assurance, and an independent review was not completed until March 2022.

149    Secondly, Crown’s ECDD programmes did not include appropriate systems and controls to apply enhanced customer due diligence to high-risk customers. The ECDD programmes did not include appropriate systems or controls to obtain, analyse and record source of wealth and source of funds information in respect of customers, and were not supported by appropriate information management and record keeping. Crown regularly dealt with customers presenting higher risk, including junket customers, international “VIP customers”, “high rollers” and foreign politically exposed persons (PEP), who were required by the Act and Rules to be subject to ECDD or escalated to senior management for approval. The ECDD programmes were not capable of identifying and escalating those high-risk customers, and did not provide adequate guidance on the ECDD measure to be applied or the senior management considerations to be assessed when determining to continue a business relationship with a customer.

150    Thirdly, Crown failed to include appropriate systems and controls in the standard Part A programmes to ensure compliance with the obligations to report under ss 41, 43 and 45 of the Act. As a result, AUSTRAC and law enforcement agencies were denied financial intelligence, impacting law enforcement investigations, prosecutions and the recovery of proceeds of crime.

Part B programmes – Chapter 4 of the Rules

151    Crown’s standard Part B programmes did not meet the requirements of the Rules from March 2016 to November 2020. In particular, the standard Part B programmes did not include appropriate risk-based systems and controls to:

(1)    identify customers who were high-risk at the time the ACIP was being carried out, including politically exposed persons. As a result, there were no risk-based procedures to determine whether to collect and verify additional KYC information with respect to these customers, such as information relating to the beneficial ownership of funds;

(2)    consider the nature and purpose of the business relationship with customers who were junket operators, junket representatives and junket players; and

(3)    consider the risks posed by designated services under s 6 of the Act (credit and remittance).

152    As a result, the standard Part B programmes applied the same “safe-harbour” ACIPs to all customers regardless of risk. This impacted Crown’s ability to identify unusual activity, such as unusually high turnover or losses, and its ability to mitigate and manage the ML/TF risks of high-risk customers and understand the ML/TF risks of third-party transactions. These failures were exacerbated by deficiencies in Crown’s information management systems.

The joint AML/CTF programme

153    It is necessary to say something briefly about Crown’s contraventions with respect to the joint AML/CTF programme.

154    In November 2020, a joint AML/CTF programme was approved for Crown Melbourne and Crown Perth. In May 2021, the Crown Resorts board approved the “Financial Crime Compliance & Change Program” (FCCCP).

155    The FCCCP is a significant programme of work to uplift and implement the procedures, systems and controls that Crown adopts and maintains through its joint AML/CTF programme. From November 2020, the joint AML/CTF programme started to improve Crown’s identification, mitigation and management of ML/TF risk, and the subsequent versions of the joint AML/CTF programme adopted during and after the relevant period have each made further progressive enhancements.

156    As at November 2020, however, the joint AML/CTF programme was yet to be fully operationalised. This was because many of the underlying procedures, systems and controls were yet to be adopted and implemented. In many cases, it took significant time to design, implement and embed these underlying procedures, systems and controls.

157    As a result, the non-compliance described above in relation to the standard Part A and Part B AML/CTF programmes persisted with respect to the joint AML/CTF programmes between November 2020 and March 2022.

158    It follows that during that period, Crown did not adopt and maintain an AML/CTF programme that met the requirements of the Act and Rules, contrary to s 81(1).

G.1.2    Section 36(1) contraventions

159    Crown has admitted to a total of 546 contraventions of s 36(1) of the Act. These contraventions comprise 84 contraventions relating to customers who posed higher ML/TF risks (high-risk customers), and 462 contraventions relating to other customers (typology customers): see SAFA (at column 1, appendix 1).

160    Crown has admitted to contraventions of s 36(1) of the Act in relation to a total of 60 high-risk customers, being 58 contraventions by Crown Melbourne and 26 contraventions by Crown Perth. Those contraventions occurred over the course of six years. The contraventions occurred each time Crown failed to monitor each of the high-risk customers in relation to the provision by it of designated services with a view to identifying, mitigating and managing the ML/TF risk that Crown reasonably faced, and to do so in accordance with the Rules.

161    In broad terms, the failures leading to the s 36(1) contraventions can be summarised as follows:

(1)    failing to undertake appropriate risk-based customer due diligence with respect to the high-risk customers;

(2)    failing to recognise high-risk customers as high-risk sooner than Crown did and, in some circumstances, failing to recognise high-risk customers as high-risk at all;

(3)    not carrying out appropriate risk-based ECDD measures with respect to high-risk customers in circumstances where:

(a)    Crown Melbourne and/or Crown Perth had formed a suspicion with respect to a particular high-risk customer for the purposes of s 41 of the Act: r 15.9(3) of the Rules; or

(b)    Crown Melbourne and/or Crown Perth had rated a high-risk customer as high-risk: r 15.9(1) of the Rules; or the high-risk customer was a PEP: r 15.9(2) of the Rules;

(4)    Crown’s senior management failed to provide appropriate ongoing oversight with respect to the high-risk customers and, in the absence of appropriate guidance, failed to give adequate consideration to the ongoing ML/TF risks posed by these customers: r 8.4.1 of the Rules.

162    In addition, Crown has admitted to contraventions of s 36(1) of the Act in relation to a total of 445 typology customers, being 322 contraventions by Crown Melbourne and 140 contraventions by Crown Perth. The contraventions occurred over the course of six years and occurred each time Crown did not apply appropriate risk-based transaction monitoring to the deposit accounts and safekeeping accounts of the typology customers to detect transactions potentially indicative of ML typologies. As a consequence, Crown failed to identify transactions potentially indicative of the ML/TF typologies (see SAFA, Schedule 2).

163    Crown’s contraventions of s 36(1) in relation to ongoing customer due diligence were serious. To take only a few examples, high ML/TF risks were apparent with respect to customers who:

(1)    had been suspected of, charged, arrested, prosecuted, convicted or imprisoned in connexion with offences, including in some cases dealing with the proceeds of crime and money laundering. Crown Melbourne, for instance, was aware that “Customer 31” (who it had never rated as high-risk) had previously been arrested in connexion with bribery charges and was alleged to oversee the majority of prostitution, gambling, narcotics, extortion and smuggling in a foreign country;

(2)    transacted with cash that appeared suspicious, including cash in plastic bags, shoeboxes or cardboard boxes, cash in rubber bands, small denominations of notes and counterfeit cash, in transactions totalling over $10.5 million;

(3)    refused or ignored requests from Crown to provide information with respect to the source of their funds. Three of these customers, for instance, turned over more than $70 million without Crown having promptly obtained or considered information in relation to the source of those funds;

(4)    transferred money through overseas deposit services in circumstances where Crown did not conduct identification, source of funds or wealth checks; or

(5)    had been connected to other Crown customers in respect of whom Crown had formed suspicions or who had been banned from Crown casinos and other properties.

G.2    Loss and damage suffered (s 175(3)(b)) and benefit derived

164    Crown operates in an industry known, internationally and within Australia, to pose high ML/TF risks and, in particular, to attract money laundering from organised crime. Crown facilitated the provision of designated services in the billions of dollars in the absence of appropriate AML/CTF controls.

165    I have already explained that in a risk-based statutory regime, it is difficult, if not impossible, to quantify the loss or damage caused, or the profit derived from, the contravening conduct. While it is possible to point to some examples of high-risk customers and transactions that are indicative of ML/TF activity having been realised, the most significant harm is unquantifiable.

166    Where loss or damage cannot be quantified due to the nature of the contraventions, it is possible to set out indicia from which harm or potential harm may be inferred due to the impacts the wrongful conduct had on the objects of the Act, consistently with the approach I have identified above (at [107]–[116]); see also AUSTRAC v Westpac (at 274–275 [172]–[179] per Beach J). For the following reasons, I infer that not insignificant loss or damage was caused by reason of the contravening conduct.

167    First, the failure of Crown to appropriately identify, mitigate and manage the ML/TF risks associated with the designated services it provided and to ensure appropriate systems and controls to fully and accurately report suspicious transactions resulted in inadequate controls, and reduced transparency, in relation to international payment flows.

168    Secondly, the contraventions exposed the Australian community and financial system to the systemic risk of ML/TF over the course of approximately six years.

169    Thirdly, by offering designated services that enabled money to be transferred in non- transparent ways and without subjecting customers to appropriate due diligence, Crown created higher ML/TF risks compared to businesses that were compliant. For example, organised crime could remit money through Crown in ways that involved less transparency than remitting money directly through other compliant financial institutions.

170    Fourthly, the opportunities created by the contravening conduct exposed Crown’s banking partners and other financial institutions to downstream ML/TF risks, as Crown’s customers’ money flowed through bank accounts.

171    Fifthly, the contravening conduct undermined the ability of AUSTRAC and law enforcement agencies to trace money to its source, resulting in the loss of opportunity to detect and disrupt possible suspicious and unlawful activity and to recover proceeds of crime, including with respect to predicate crimes such as drug trafficking.

172    Sixthly, the reduced transparency resulting from Crown’s conduct undermined the reputation, integrity and security of Australian and global payments systems.

173    In relation to the benefit obtained by Crown by reason of the contravening conduct, I have already noted that there are difficulties in calculating a precise figure, but the example of junket play is instructive.

174    Prior to the COVID-19 pandemic and public inquiries into the casino industry in Australia, junkets were a fixture of Australian casinos. As noted earlier, junkets are known to be highly vulnerable to organised crime, and served as a non-transparent channel through which billions of dollars were gambled in Australian casinos, including Crown, in the absence of appropriate risk-based systems and controls.

175    Revenue from designated services provided through junket channels represented a material source of Crown’s revenue, totalling close to $1.7 billion during the relevant period.

176    Crown actively pursued junket business, including by entry into agreements with junket operators, and adopted business practices in the pursuit of profit that minimised transparency of transactions. For example, some junket operators were permitted by Crown to operate their own cash administration desks in private gaming rooms, facilitate the distribution of winnings to junket players, and facilitate transactions through higher-risk channels.

177    The identities of persons conducting transactions through junket programmes, and the source and ownership of funds, was often obscured. A number of junket operators and representatives were reportedly connected to organised crime. “Customer 1”, for example, who was the operator of the Suncity junket, was arrested in a foreign country in connexion with allegations relating to an illegal gambling syndicate and money laundering. Crown Melbourne and Crown Perth facilitated over 250 Suncity junket programmes, the turnover of which exceeded $22.2 billion during the relevant period.

178    Crown’s turnover is relevant to the harms and benefits associated with the contravening conduct because it represents the volume of money transacted through the provision of designated services by Crown without appropriate risk management. Turnover figures indicate the scope of the opportunity for ML/TF risks to be realised, as every designated service provided by Crown in the relevant period created an opportunity to launder money.

179    Crown also obtained material benefits in the form of revenue and profit from the provision of services to high-risk customers, including those the subject of the s 36(1) contraventions, and through high-risk customers, and through high-risk channels such as VIPs, high-rollers and junket play.

180    On the evidence before me, it is estimated by Mr McGregor, Chief Financial Officer of Crown Resorts, that during the relevant period, the profit Crown made from high-risk customers and junkets was approximately $155 million. Crown made profits of approximately $97 million from revenue received from high-risk customers (which included revenue from some junkets) plus approximately $58 million profit from revenue received from junkets not attributable to high-risk customers: McGregor Affidavit (at [32]–[40]). It is said Mr McGregor was not challenged on this evidence, it is not inherently improbable and it follows that it ought to be accepted: see Precision Plastics Pty Limited v Demir (1975) 132 CLR 362 (at 371 per Gibbs J).

181    The above figures are relevant to my assessment of the proposed penalty, but must be tempered by the fact that the turnover, revenue or any other amounts referred to in these reasons are not representative of the profit or benefit Crown in fact derived by reason of the contravening conduct, for reasons I have already explained. They are best estimates, and are estimates that have not been the subject of independent scrutiny. As a result, the utility of these figures to my ultimate assessment of the proposed penalty is limited, and eclipsed by other factors, noting that an assessment of the benefit derived from the contraventions is but one of the factors to be weighed in the process of instinctive synthesis in fixing a penalty that is within the appropriate range: ACCC v Reckitt Benckiser (at 37–38 [44] per Jagot, Yates and Bromwich JJ).

G.3    Previous findings against Crown (s 175(3)(d)–(g))

182    No previous findings have been made against Crown for the purpose of ss 175(3)(d), (e), (f) or (g) of the Act.

183    This circumstance does not, however, displace the necessity for a substantial penalty in the light of the seriousness of the wrongful conduct. A first-time contravention does not always require a substantial discount, particularly where the contravention is serious and occurred over a considerable period of time: Volkswagen Aktiengesellschaft (at 430 [144] per Wigney, Beach and O’Bryan JJ), quoting Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; (2017) 275 IR 148 (at 205 [177] per Bromwich J).

G.4    Other relevant matters

184    Having addressed the mandatory considerations under s 175(3) of the Act, I turn now to other relevant matters which inform my conclusion that the proposed penalty is within the range of penalties sufficient to achieve the twin objective of specific and general deterrence.

G.4.1    Specific deterrence

185    The circumstances of the contravener, and not just the circumstances of the contraventions, will often be highly relevant in forming a view as to specific deterrence. Indeed, in some cases, the circumstances of the contravener may be more significant in terms of the necessity for deterrence than the circumstances of the contraventions: ABCC v Pattinson (at 441 [60] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ).

186    For the reasons that follow, there are circumstances peculiar to Crown which inform my conclusion that the proposed penalty is necessary to achieve specific deterrence.

Measures taken by State legislatures and regulators

187    During and following the conduct the subject of this proceeding, there have been three commissions of inquiry into Crown or Crown Resorts (of which Crown Melbourne and Crown Perth were, and remain, subsidiaries), namely:

(1)    the inquiry under the Casino Control Act 1992 (NSW) in New South Wales;

(2)    the Royal Commission into the Casino Operator and Licence in Victoria; and

(3)    the Perth Casino Royal Commission in Western Australia.

188    It is not to stretch unduly the bounds of s 144 of the EA to note that these inquiries, which in part traversed matters relevant to this proceeding, have been gravely damaging not only to Crown’s financial position, but its reputation. In all three instances, the relevant licence-holder was found to be unsuitable to hold a casino licence.

189    In Victoria, the legislature responded to the Royal Commission into the Casino Operator and Licence by amending the Casino Control Act 1991 (Vic) (CCA). In essence, the effect of those amendments is that any future material contravention by Crown Melbourne of the Act would imperil its ability to operate a casino business in Victoria, because it would bear upon the decision of the Victorian Gambling and Casino Control Commission (VGCCC) to determine whether Crown Melbourne is, among other things, “a suitable person to continue to hold the Melbourne Casino Licence”.

190    As part of those amendments, the VGCCC has been armed with a power to impose fines of up to $100 million. Between 2021 and 2023, Crown has been subject to fines ranging from $1 million to $80 million by the VGCCC arising from contraventions that are also concerned with its failure to guard against exploitation of its casinos by organised crime.

191    In Western Australia, in response to the recommendations of the Perth Casino Royal Commission, the Parliament of Western Australia passed legislation to give effect to the Perth Casino Royal Commission’s recommendations that Crown Perth have a two-year remediation period, subject to supervision and review by an independent monitor. The legislative scheme is not dissimilar to that imposed on Crown Melbourne. That is, any future non-compliance during the remediation period by Crown Perth with the Act would imperil its ability to continue to operate the Perth Casino.

192    The parties submit that these circumstances provide an additional powerful deterrent against future contraventions of the Act. If Crown were to commit such contraventions, it would be imperilling its ability to operate a casino business. I accept this submission.

Remediation measures

193    Since 2020, Crown has plainly taken remediation measures to improve its ability to identify, mitigate and manage the ML/TF risk posed by the designated services it provides. It has invested more than $40 million in financial crime compliance since 2020, with a budget of $27.9 million for the 2023 financial year, and further investment committed for future financial years.

194    “Enhancements” have been made under a management-led programme with board oversight, which relate to first, governance, oversight and resourcing in relation to the joint AML/CTF programme; secondly, enhancements to risk assessment capabilities and risk-based systems and controls; thirdly, regulatory relationships and industry engagement; and fourthly, internal and external assurance over the joint AML/CTF programme and transformation programme.

195    The AUSTRAC CEO acknowledges that while Crown’s programme of reform is ongoing, the steps Crown has taken to date has significantly reduced its exposure to ML/TF risk. Again, I accept this submission.

Contrition and cooperation

196    On the evidence before me, Crown:

(1)    agrees that money laundering and terrorism financing undermine the integrity of the Australian financial system and impact the Australian community's safety and wellbeing;

(2)    acknowledges that, as a casino, Crown plays a key role in combating money laundering and terrorism financing;

(3)    accepts that it is accountable for the admitted contraventions;