Appendix I

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Appendix I

Special Manager requirements

General

  1. The Special Manager must consider:
    1. whether there is any evidence of maladministration
    2. whether there is any evidence of illegal or improper conduct
    3. whether Crown Melbourne has engaged in conduct that may give rise to a material contravention of any law
    4. the conduct of the casino operations generally since the conclusion of the Commission.
  2. The Special Manager’s report must:
    1. contain details of each direction given by the Special Manager
    2. state whether the direction was complied with
    3. state whether Crown Melbourne’s directors and executives cooperated with the Special Manager in the performance of its functions.

Risk management

  1. The Special Manager is to evaluate whether:
    1. Crown Melbourne has conducted a suitable ‘root cause’ analysis into the failures outlined in the Report and in the Report of this Commission
    2. Crown Melbourne has implemented, completely and effectively, the recommendations made by Mr Peter Deans in his Expert Report on the Risk Management Frameworks and Systems of Crown Resorts Limited1
    3. an external review has been undertaken of the robustness and effectiveness of Crown Melbourne’s risk management framework, systems and processes, and their appropriateness to Crown Melbourne as a casino operator, and whether any recommendations made as a result of that review have been implemented completely and effectively.

Culture

  1. The Special Manager is to determine whether Deloitte has completed Phase 4 of its Project Darwin and is to evaluate the implementation and effectiveness of Crown’s cultural reform program.

Anti-money laundering/counter-terrorism financing

External report recommendations

  1. The Special Manager is to evaluate whether there has been effective implementation of the recommendations set out in the following reports:
    1. Promontory Phase 1 Report dated 24 May 2021 and titled ‘Phase 1: AML Vulnerability Assessment’.2 The recommendations are set out in section 4.
    2. Promontory Phase 2 Draft Report dated 20 June 2021 and titled ‘Strategic Capability Assessment’.3 This report sets out a forward-looking strategic assessment and articulation of a ‘target state model’ for Crown Resorts to achieve in order to manage financial crime risk.

      The Special Manager is to assess whether Crown’s financial crime workforce numbers, structures, roles and functions correspond with the ‘target state’ articulated in this report.

    3. Deloitte Phase 1 Report dated 26 March 2021 and titled ‘Assessment of Patron Account Controls’.4 The recommendations are summarised in a report dated 13 April 2021 titled ‘Phase 1: Assessment of Patron Account Controls—Assessment of Crown’s Response’.5
    4. Deloitte Phase 2 Report concerning a Forensic Review of Crown’s Patron Accounts. The details of the Phase 2 Forensic Review are set out in Deloitte’s engagement letter dated 22 February 2021.6
    5. Deloitte Phase 3 Report concerning a Further Controls Assessment. The details of the Further Controls Assessment are set out in Deloitte’s engagement letter dated 22 February 2021.7
    6. Deloitte Report on Hotel Card Transactions Review. The details of the Hotel Card Transaction Review are set out in a document dated 8 July 2021 and titled ‘Forensic Review: Updated Timings for Phase 2 and 3 of Forensic Review (including HCT matter)’.8
    7. Initialism Transaction Monitoring Review dated June 2021.9 The recommendations are on pages 6, 14, 28–9, 37–8 and 44.

McGrathNicol report

  1. McGrathNicol’s Forensic Review dated July 2021 identified preliminary indications of ‘structuring’ and ‘parking’ (being money laundering techniques) on Crown Melbourne’s DAB accounts.10
  2. McGrathNicol recommended further investigation of those transactions and the suspected structuring and parking.
  3. The Special Manager is to determine whether the further investigation has occurred and, if so, whether any changes to Crown’s AML/CTF Program are necessary and have been implemented.

Crown’s Financial Crime and Compliance Change Program

  1. Crown’s Financial Crime and Compliance Change Program (FCCCP) is set out in a document prepared by Mr Steven Blackburn, Crown’s Group Chief Compliance and Financial Crime Officer, dated 24 May 2021.11 The FCCCP focuses on 10 key areas for uplifting Crown’s financial crime and compliance performance; namely people, risk appetite, frameworks, risk assessments, reporting and oversight, assurance, training, roles and responsibilities, customers and controls, and data and systems.
  2. The Special Manager is to evaluate whether all the recommended reforms set out in the FCCCP (and any additions to that program) have been effectively implemented.

Other external expert work

  1. The Special Manager is to evaluate whether there has been effective implementation of any recommendation, whether or not set out in a report, in respect of the following work:
    1. PwC Australia’s work for Crown concerning an uplift in Crown’s SMR reporting, TTR reporting and/or IFTI reporting;
    2. Allens Linklaters’ work for Crown concerning an uplift in Crown’s SMR reporting, TTR reporting and/or IFTI reporting; and
    3. an enterprise-wide risk assessment.

Resourcing

  1. The Special Manager is to assess the adequacy of Crown Melbourne’s financial crime budget.
  2. The Special Manager is to assess the adequacy of the staff numbers in the financial crime group.

AML/CTF Program

  1. The Special Manager is to evaluate whether the Crown Melbourne board is providing effective and meaningful oversight of its AML/CTF Program.
  2. The Special Manager is to assess whether Crown Melbourne is complying with its AML/CTF Program.
  3. The Special Manager is to review any internal or external audits conducted on any part of Crown Melbourne’s AML/CTF Program and evaluate whether any non-compliance identified has been remedied.

Responsible service of gambling

  1. The Special Manager is to assess Crown Melbourne’s responsible service of gambling program. This assessment should include examining:
    1. the effectiveness of Crown Melbourne’s staff training in the responsible service of gambling;
    2. the adequacy of the responsible service of gambling staff numbers;
    3. the adequacy of funding of Crown Melbourne’s responsible service of gambling program;
    4. the effectiveness of the services provided by the responsible service of gambling staff;
    5. the effectiveness of Crown Melbourne’s Self-Exclusion Program and related programs (for example Time Out);
    6. the effectiveness of the responsible service of gambling ‘enhancements’ approved in May 2021;12 and
    7. whether Crown Melbourne complies with its Gambling Code and Play Periods Policy.

Compliance with statutory and contractual obligations

  1. The Special Manager is to review whether Crown Melbourne complies with its obligations under the Casino Control Act, the Gambling Regulation Act, the Casino Agreement and the Management Agreement.

Definitions

  1. The following definitions apply to the terms in this document:
    1. AML/CTF means Anti-money laundering and counter-terrorism financing.
    2. Casino Agreement means the agreement between the regulator (then known as the Victorian Casino Control Authority) and Crown Melbourne (then known as Crown Casino) on 21 September 1993 as amended from time to time.
    3. Crown Melbourne means Crown Melbourne Limited.
    4. DAB means deposit account balance.
    5. IFTI means international funds transfer instruction.
    6. Management Agreement means the agreement between the State and Crown Melbourne (then known as Crown Casino) on 20 April 1993 as amended from time to time.
    7. SMR means suspicious matter report.
    8. TTR means transaction threshold report.

    Whenever the Special Manager is required to report on the implementation of recommendations or reforms, the Special Manager should also report on the implementation of any variation to those recommendations or reforms.

Endnotes

1 Exhibit RC0971 Peter Deans Expert Report on the Risk Management Frameworks and Systems of Crown Resorts Limited, 29 June 2021.

2 Exhibit RC0100 Promontory Phase 1: AML Vulnerability Assessment, 24 May 2021.

3 Exhibit RC0397 Promontory Phase 2: Strategic Capability Assessment Report, 20 June 2021.

4 Exhibit RC0084 Statement of Lisa Dobbin, 16 April 2021, Annexure e.

5 Exhibit RC0084 Statement of Lisa Dobbin, 16 April 2021, Annexure f.

6 Exhibit RC0084 Statement of Lisa Dobbin, 16 April 2021, Annexure a; see in particular Appendix 1. The terms of the engagement were varied by letter dated 19 March 2021: Exhibit RC0084 Statement of Lisa Dobbin, 16 April 2021, Annexure b. See also the detail in Exhibit RC0476 Deloitte Crown Resorts Updated Timing for Phase 2 and 3 of Forensic Review, 30 June 2021.

7 Exhibit RC0084 Statement of Lisa Dobbin, 16 April 2021, Annexure a; see in particular Appendix 1. The terms of the engagement were varied by letter dated 19 March 2021: Exhibit RC0084 Statement of Lisa Dobbin, 16 April 2021, Annexure b.

8 See Exhibit RC0476 Deloitte Crown Resorts Updated Timing for Phase 2 and 3 of Forensic Review, 30 June 2021 for details on the scope of this work and report.

9 Exhibit RC1351 Initialism Transaction Monitoring Review Crown Resorts, June 2021.

10 Exhibit RC1460 McGrathNichol Forensic Review AML/CTF Report, 19 July 2021.

11 Exhibit RC0311 Further Supplementary Statement of Steven Blackburn, 7 June 2021, Annexure a.

12 Exhibit RC0696 Minutes of Crown Resorts board meeting, 24 May 2021; Exhibit RC0122 Letter from Allens Linklaters to Solicitors Assisting, 26 May 2021.

Reviewed 25 October 2021

Appendices