NSW Gambling Regulators have banned Crown Resorts from opening their new Sydney casino over money laundering concerns.

The NSW Independent Liquor and Gaming Authority (ILGA) made the decision after the company admitted that money laundering had likely occurred through its accounts.

The investigation was originally set up to investigate suspicious activity.

The amount of suspicious money was in the millions.

Money laundering concerns

ILGA Chairman Philip Crawford spoke on behalf of the agency and said they were “not satisfied” with Crown’s conduct of gambling operations pending the results of the ongoing investigation.

The commissioner for the investigation is Patricia Bergin, SC. The results are expected to be published in February 2021.

Crown Resorts had planned to operate a multi-billion dollar venue in Barangaroo, Sydney’s business district.

Mr Crawford said the main concern was money laundering.

Crown Resorts officials admitted that this would “likely” be done through accounts set up for its VIP players.

“We had no news that this was done. I don’t think the Bergin investigation or legal counsel knew about it, and it literally came around the eleventh hour – apparently around 11 am last night,” Crawford said.

The investigation found that millions of dollars had been deposited for high rollers to play at Crown’s casinos in Melbourne and Perth.

The accounts were held by two companies – Riverbank and Southbank – controlled by Crown Resorts.

The company’s money laundering attorneys filed the company’s response to the claims just days before the investigation closed.

The ILGA is examining whether Crown is able to own the license for the soon to be opened casino in Barangaroo.

What is “Cuckoo Smurf”?

Cuckoo Smurf is a form of money laundering in which large transactions are broken down into smaller deposits to avoid detection.

Crown Resorts attorney Robert Craig SC said the company has accepted that “cuckoo smurfs” are likely to occur.

“Cuckoo Smurf is an elaborate money laundering typology where innocent parties make and receive legitimate payments, with illegal funds inserted into the process of making those legitimate payments,” he said.

“Crown accepts that it can be concluded that deposits to the riverside and south bank accounts were most likely part of the Cuckoo Smurf activity at some point.”

However, a report from a third party verifying the transactions failed to identify specific transactions that could be illegal.

“However, the evidence does not allow this standard or, more importantly, to unequivocally identify specific cases or transactions in which money laundering has occurred,” he said.

Crown Resort’s board of directors claimed they were unaware of the suspicious activity reported by the banks and later brought up by senior executives.

Commissioner seeks clarity

Commissioner Patricia Bergin asked Mr. Craig SC if Crown Resorts regularly accepts money laundering and asked, “What do you say, Mr. Craig, really, it is either an indication of money laundering or not?”

In response, Craig SC said the company does not accept that certain cases of money laundering could be proven. However, he said certain conclusions could be drawn.

“What I’m saying is that from this report it can be concluded that deposits into these accounts at some point were most likely Cuckoo Smurfing activity, some form of money laundering. (But) what cannot be done is determined based on this analysis whether or not a particular transaction is money laundering. “

“You have to pay attention to the standard of evidence that you use,” he said.

This reflects the different standards of evidence for criminal and civil cases.

In a criminal case, the public prosecutor’s office usually has to prove every element of a criminal offense “beyond any doubt”. Most criminal cases in Sydney are heard in the Downing Center District Court.

In a civil case, the court need only be satisfied with the “balance of probabilities”. This is commonly referred to as the “more likely than not” test.

Applying this to the above case, prosecution would be very difficult as there are no specific examples that a prosecutor could point out. An experienced money laundering attorney would be able to defend the charges with relative ease.

However, in a civil case, the court was able to accept conclusions to convince itself that it was “more than likely” that “the cuckoo smurf” was taking place.

Request based on recommendations

When the investigation is complete, Commissioner Bergin is expected to provide a list of recommendations.

Recommendations include whether to remove the Crown Resorts license entirely or to impose broad recommendations to improve control over them.

What follows are a number of recent incidents involving money laundering systems, such as the one reported here.

Money laundering fees

Money laundering is commonly charged because handling money or property that was the proceeds of crime is a criminal offense under Section 193B of the Crimes Act 1900 (NSW).

The public prosecutor must prove that:

  1. The defendant was engaged in money or property (ie, received, possessed, hid or disposed of); and
  2. (Depending on the alleged level of knowledge) The defendant knew; or was inconsiderate; or was negligent in relation to the fact that money or property is the proceeds of crime; and
  3. (Only when the intention is to hide something) is intended to conceal the fact that it is the proceeds of crime.

There are also a number of defenses against money laundering charges that can be used to determine that the crime is “not guilty”.

When it comes to large sums of money, police can file an application with the NSW Supreme Court to freeze orders.

This prevents you from accessing your bank accounts and can even result in your assets being frozen. You cannot withdraw funds from these accounts or sell these assets while the freeze orders are in place.

When analyzing the criminal statistics for money laundering by the district court, we can see that since 2018, 29% of those found guilty have received a prison sentence.

Of the remaining offenders, 15% were sentenced to full-time sentences. Only 5% received no money laundering conviction. All other offenders were convicted on their criminal records.

In the district court, 100% of the perpetrators were sentenced to some form of imprisonment. 73% of the perpetrators were sentenced to full-time prison.

Money laundering is clearly taken very seriously by the courts.

Nonetheless, there have been a number of recent examples of the dismissal of these charges after a defendant retained experienced criminal lawyers. Having the best criminal defense attorneys on money laundering charges will go a long way towards surpassing those charges.

The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.