AUSTRAC commences Federal Court proceedings against Star Entertainment Group entities

AUSTRAC has commenced civil sanction proceedings in the Federal Court against The Star Pty Limited and The Star Entertainment QLD Limited (the Star Entities) for alleged serious and systemic non-compliance with Australia’s Anti-Money Laundering and Anti-Terrorism Financing (AML/CTF) laws.

The civil penalty proceeding follows a proactive industry-wide AUSTRAC compliance campaign which began in September 2019 and led to the opening of an enforcement investigation into The Star Pty Limited in June 2021. In January 2022, the investigation was expanded to include The Star Entertainment Qld Limited and other Star entities.

Throughout the investigation, AUSTRAC worked closely with state and federal agencies with a regulatory interest in the Star Entities, including the NSW and Queensland gaming regulators and ASIC.

AUSTRAC CEO Nicole Rose said casinos must take their anti-money laundering obligations seriously to protect Australia’s financial system, their businesses and the community from criminal exploitation.

“Criminals will always seek to exploit the financial system to launder money and harm the community. Businesses, as the first line of defense for our financial system and our communities, are often the first to be alerted to criminal activity.”

“The AUSTRAC investigation identified a multitude of issues, including poor governance and failures to manage risk and to have and maintain a AML/CFT compliant program.”

“The Star Entities also failed to carry out proper customer due diligence, resulting in widespread and serious non-compliance over a number of years,” Ms Rose said.

AUSTRAC’s allegations are broad and include that the Star Entities:

  • Failed to properly assess the money laundering and terrorist financing (ML/FT) risks they faced, including the likelihood and impact of those risks, and to identify and respond to changes in risk over of time.
  • They did not include in their AML/CFT programs adequate risk-based systems and controls to mitigate and manage the risks to which the Star Entities were reasonably exposed.
  • An adequate framework for Board and senior management oversight of AML/CFT programs has not been established.
  • It did not have a transaction monitoring program to monitor transactions and identify suspicious activity that was appropriately risk-based or appropriate to the nature, size and complexity of the Star Entities.
  • It did not have an adequate enhanced due diligence program to perform additional checks on higher risk customers.
  • It did not conduct adequate and ongoing customer due diligence for a number of customers that presented higher money laundering risks.

In the absence of adequate ML/TF risk oversight, Star Entities:

  • They allowed customers to move money through payment channels that were not transparent and involved high ML/FT risks.
  • We did not understand the sources of money moving through these channels or whether there was a risk that the source of funds was illicit.
  • It did not consider whether it was appropriate to continue an ongoing business relationship with higher risk customers.

In the absence of these risk-based controls, Star Entities were vulnerable to criminal exploitation. Star’s failure to manage the ML/FT risks of its business in turn exposed the Australian and global financial system to systemic ML/FT risks over many years.

Ms Rose said the lack of appropriate controls and processes prevented Star Entities from properly managing high-risk customers. These deficiencies facilitated the movement of money in non-transparent ways, making Star Entities vulnerable to criminal exploitation.

“AUSTRAC continues to work with Star Entities to ensure they comply with their obligations under the Act, including having appropriate systems, controls and governance in place and reporting quality financial information and suspicious matter reports to AUSTRAC.”

Whether a civil penalty order is made and any amount are matters before the court.

/Public press. This material from the original organization/authors may be of a topical nature, edited for clarity, style and length. The views and opinions expressed are those of the author(s). View in full here.

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