After the financial regulator AUSTRAC pursued it over these breaches, Crown admitted having inadequate financial systems in place and agreed to the $450 million penalty in May.

Justice Michael Lee still has to green-light this amount and heard arguments from AUSTRAC’s barrister Michael Hodge, KC, on Monday about why the penalty was appropriate.

Mr Hodge pointed to Crown’s “very high level” of co-operation with the regulator.

The firm also expressed contrition over the admitted breaches by completely replacing its board of directors and senior management following public awareness of its failings, the barrister said.

However, the judge questioned whether this actually showed Crown was sorry for what it had done, saying it was in the firm’s interests to replace the board.

“Contrition means more than saying sorry when you get caught,” he said.

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“What contrition means is a state of mind in people who have done wrong to play with a straight bat in the future, not the people who have done wrong being swept out and new people being there.”

Justice Lee also pointed out that AUSTRAC had deviated from the typical Federal Court approach in which a $450 million penalty plus additional interest would have been sought.

Instead, Crown is to make staggered payments over two years without having to pay interest on later instalments totalling $325 million.

“[AUSTRAC] put out a press release saying they’re getting a $450 million penalty. They’re not. They’re getting a $406 million penalty [plus interest],” the judge said.

Crown’s barrister Philip Crutchfield, KC, warned against the judge changing the agreed settlement, saying it had been painstakingly negotiated over months.

He said the firm could not afford to pay the full amount without a payment plan.

If Crown was forced to repay something more than it could afford, it would be required to enter loan talks to gain further funds.

“It would be in nobody’s interests for those negotiations to be unsuccessful and Crown fall into administration,” Mr Crutchfield said.

Crown Resorts, which was acquired by funds managed by Blackstone in an estimated $8.9 billion transaction in June last year, has net assets worth $3.5 billion.

It received a net profit of $402 million in the 2019 financial year but has posted losses for the four years after that. This year, the firm estimates a $390 million loss, the court heard.

In October 2020, Westpac was ordered to pay $1.3 billion for breaches of anti-money laundering and counter-terrorism laws, while the Commonwealth Bank of Australia paid $700 million for similar contraventions in June 2018.

The hearing continues on Tuesday.

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