Last year, the Federal Court of Australia penalised Crown Melbourne and Perth casinos with a $450 million fine over two years for contravening the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). This case provides valuable insights on how you can understand and comply with your AML/CTF obligations and implement effective programs for your business.

Reasons for Crown’s non-compliance

Under the AML/CTF Act, regulated entities are responsible for implementing a Part A AML/CTF Program, which has the primary purpose of identifying, mitigating, and managing the money laundering and terrorism financing (ML/TF) risks reasonably faced by the reporting entity. This is known as the ‘primary purpose obligation’.

In its judgment, the Federal Court of Australia found that Part A of Crown’s AML/CTF Programs did not meet the primary purpose obligation. The judgment sets out four reasons why Crown’s Part A Programs did not have the primary purpose of identifying, mitigating and managing its ML/TF risks:

1. The Programs did not refer to or incorporate a written ML/TF risk assessment methodology capable of identifying and assessing the ML/TF risks of all designated services provided by Crown.
2. The Programs were not aligned to the ML/TF risks faced by the Crown, as periodically assessed in accordance with an appropriate ML/TF risk assessment methodology. 
3. The Programs did not include appropriate risk-based systems and controls capable of identifying, mitigating, and managing ML/TF risks consistent with Crown’s risk appetite.
4. The Programs did not include or establish an appropriate framework for board and senior management approval and oversight, and Crown’s reporting to boards and senior management was unclear, inconsistent and incomplete 

Lessons learned from the Crown case

Reporting entities should ensure they understand the obligation to maintain a Part A Program that has the primary purpose of identifying, mitigating and managing ML/TF risk. Boards and senior managers should consider whether their own AML/CTF Programs effectively target ML/TF risks in a responsive manner and whether they are adaptable to changes in their risk environment. AUSTRAC has emphasised the role of boards and senior management in driving AML/CTF Act compliance in its 2024 Regulatory Priorities. We will be looking to see whether businesses have applied these learnings to ensure that Part A of their AML/CTF Program has the primary purpose of identifying, mitigating, and managing ML/TF risk.

More information

For more information, please view our website, including the AML/CTF programs page. If you have any questions about these changes, please email contact@austrac.gov.au.