’s gambling regulator is set to launch against Australian gaming giant Crown Resorts, the Victorian Gambling and Casino Control Commission announced on Tuesday. The VGCCC could impose fines of up to A$100 million ($75.8 million) on the company after an inquiry found the operator enabled the illegal transfer of funds from China.

The company was informed about the commencement of proceedings that same day, which are in connection to what the regulator calls the “China Union Pay process.” This scheme was devised by to evade Chinese currency restrictions and enable the illegal transfer of funds from China, the Royal Commission into the operator’s license found.

Actions available to the VGCCC as part of the proceeding include imposing a fine of up to A$100 million, varying the casino license, and/or censuring and directing it to take rectification steps, a press announcement informs.

“As a first step, we are acting on the Royal Commission’s findings that ’s China Union Pay process breached important Victorian regulatory obligations, was illegal and constituted serious misconduct,” said VGCCC Chair Fran Thorn.

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The China Union Pay (CUP) process is described in the Royal Commission report as “the use of the Chinese-based bank card China Union Pay to allow international patrons to access funds in order to gamble at Crown Melbourne.” This occurred between 2012 and 2016, the inquiry found.

The Crown Towers hotel issued a room charge bill to the patron, falsely asserting that the hotel had provided services to the person. The patron would then pay the bill using their CUP card, and be given a voucher acknowledging receipt of funds. Then the person, accompanied by a Crown VIP host, took the voucher to the cage and exchanged it for cash or chips.

According to the Royal Commission, the process was devised because China had imposed restrictions on Chinese nationals transferring money out of the country: between 2012 and 2016, a Chinese national could not transfer more than $50,000 per year to another jurisdiction.

“The Chinese currency restrictions were well known to Crown Melbourne executives,” the Royal Commission report reads. “The CUP process was devised to enable the illegal transfer of funds from China”.

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The inquiry concluded the process was illegal, amounting to a series of breaches of the Casino Control Act 1991, which Crown admitted in its written closing submissions to the Royal Commission. The operator failed to comply with important regulatory obligations, which the VGCCC deems “required for the proper operation of the Melbourne casino.”

Specifically, the operator breached section 68 of the CC Act, which prohibits Crown from providing money or gambling chips in a transaction involving a credit or debit card, as it did with the CUP cards. This provision aims to avoid gambling derived from criminal funds, and to support responsible gambling and minimize harm.

The casino was also found non-compliant of section 124 of the Casino Control Act, which requires the operator to keep certain accounting records, helping thus to ensure that the handling of money in the Melbourne property is effectively supervised, and so that Crown’s taxes and other financial obligations to the state and public are paid in full.

According to the Royal Commission, the CUP process constituted “serious acts of misconduct,” given that “wealthy Chinese patrons were assisted in illegally transferring up to $160 million in funds” through the scheme.

Following these findings, the CC Act was amended to enable the VGCCC to take disciplinary on the grounds that the Royal Commission had unveiled that Crown engaged in practices that were both illegal and constituted serious misconduct.

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The amended CC ACT now imposes stronger regulatory obligations on Crown, while also increasing the maximum fine the VGCCC may impose on the operator as part of any disciplinary to $100 million, up from a former $1 million.

“I welcome the legislative amendments which impose stronger regulatory obligations on Crown and provide the VGCCC with greater enforcement powers,” added Thorn. “These powers are needed to deter Crown from engaging in the conduct that was revealed during the Royal Commission.”

The VGCCC also said it would be making a further announcement once it has considered Crown’s response to the regulator’s notice and determined the appropriate disciplinary action to take. “There will also be further disciplinary proceedings arising from other matters highlighted in the Royal Commission,” a press statement reads.

On Wednesday, Crown said it would fully co-operate with the VGCCC on the Royal Commission report’s findings. Shares of the company were down 0.5% in early trading that day. An inquiry in October had declared Crown unsuitable to hold a gambling license in Melbourne, but allowed it to run the top-performing casino under supervision.





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