- Published:
- Tuesday, 5 April 2022 at 1:14 pm
The Victorian Gambling and Casino Control Commission (VGCCC) has today informed Crown Melbourne Limited (Crown) that it is commencing disciplinary proceedings in relation to the Royal Commission’s findings concerning the “China Union Pay process”.
The Royal Commission into the Casino Operator and Licence (RCCOL) found that Crown devised the “China Union Pay process” to evade Chinese currency restrictions and enable the illegal transfer of funds from China.
In this disciplinary proceeding, the actions available to the VGCCC include:
- imposing a fine (up to a maximum of $100m);
- varying the casino licence; and/or
- censuring Crown and directing it to take rectification steps.
VGCCC Chair Fran Thorn said:
“I welcome the legislative amendments which impose stronger regulatory obligations on Crown and provide the VGCCC with greater enforcement powers. These powers are needed to deter Crown from engaging in the conduct that was revealed during the Royal Commission”
“As a first step, we are acting on the Royal Commission’s findings that Crown’s China Union Pay process breached important Victorian regulatory obligations, was illegal and constituted serious misconduct.”
The VGCCC will make a further announcement once it has considered Crown’s response to the VGCCC’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.
The China Union Pay process
The China Union Pay process (CUP process) is described in the RCCOL 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”, which occurred between 2012 and 2016.[1] The RCCOL further described the CUP process as involving the following practices:[2]
“[t]he [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 pay the bill [using their China Union Pay card] and be given a voucher acknowledging receipt of funds. Then the patron, accompanied by a Crown VIP host, took the voucher to the cage and exchanged it for cash or chips.”
According to the RCCOL, the CUP process was devised because: [3]
“China had imposed restrictions on Chinese nationals transferring money out of [China]. Between the years 2012 and 2016, a Chinese national could not transfer more than USD50,000 per year to another jurisdiction. The Chinese currency restrictions were well known to Crown Melbourne executives. The CUP process was devised to enable the illegal transfer of funds from China”.
The RCCOL concluded that the CUP process was illegal, amounting to a breach of section 68 and also resulted in breaches of section 124 of the Casino Control Act 1991 (CC Act), which Crown admitted in its written closing submissions to the RCCOL. These are important regulatory obligations, required for the proper operation of the Melbourne Casino:
- Section 68 prohibits Crown from providing money or gambling chips in a transaction involving a credit or debit card, as it did with the China Union Pay cards. This aims both to avoid gambling derived from criminal funds, and to support responsible gambling and minimise harm.
- Section 124 requires Crown to keep certain accounting records, helping to ensure that the handling of money in the Melbourne Casino is effectively supervised, and so that Crown’s taxes and other financial obligations to the State and public are paid in full.
The RCCOL further found that the CUP process constituted “serious acts of misconduct”, given that “wealthy Chinese patrons were assisted in illegally transferring up to $160 million in funds”.[4]
Details of the CUP process are in Chapter 13 of the RCCOL Report.
Following the Royal Commission, the CC Act was amended to enable the VGCCC to take disciplinary action on the grounds that the Royal Commission had found that Crown engaged in conduct that is illegal or constitutes serious misconduct. The amended CC Act now also imposes stronger regulatory obligations on Crown and increases the maximum fine the VGCCC may impose on Crown as part of any disciplinary action to $100 million (from $1 million).
[1] RCCOL Report, Vol. 2, Ch. 13, p. 170, [6].
[2] Ibid., Vol 2, Ch. 13, p. 171, [14].
[3] Ibid., Vol 2, Ch. 13, p. 171, [13].
[4] Ibid. Vol 3. Ch. 18 [32].
Background
During 2021, a Royal Commission was conducted into the Victorian Casino Operator and Licence.
Among other things, the Royal Commission considered terms of reference directed at whether Crown Melbourne Ltd is suitable to hold the Melbourne Casino Licence and is complying with its legislative obligations.
The Royal Commission found not only that Crown Melbourne is unsuitable, but also that it has contravened several of its obligations.
In response to the Royal Commission’s finding and recommendations, the Victorian Government appointed a Special Manager to supervise the operations of the Melbourne Casino for a period of two years, while Crown Melbourne attempts to reform itself. After that two-year period, the VGCCC will decide whether Crown is suitable to regain the privilege of holding the Melbourne Casino licence unsupervised.
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