The Federal Court has handed down a significant ruling against The Star Entertainment Group, imposing a hefty penalty of AU$260 million ($182 million) for violations of Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regulations. This judgment, delivered by Justice Moore and made public on Wednesday, follows thorough investigations and regulatory actions at both state and federal levels regarding the casino operator's activities in Queensland and New South Wales.
Justice Moore implicated The Star in major compliance failures, stating that the company “failed to maintain a compliant AML/CTF programme and failed to monitor customers to identify, mitigate and manage money laundering and terrorism financing risks.” The court outlined that The Star's breaches included insufficient verification processes regarding customer identities and sources of funds, inadequate due diligence, and poor ongoing monitoring of customer activities. Furthermore, the casino operator permitted transactions and cash deposits from third parties without documenting their identities, and allowed continued access to private gaming rooms despite noticing suspicious activities.
These deficiencies significantly hampered AUSTRAC and law enforcement’s capacity to track illicit funds and combat criminal activity effectively. The court report highlighted that over 1,200 customers were allowed to engage in gambling through “high-risk channels” without sufficient AML/CTF protections.
In addition, revenue attributed to junket operations surpassed $1.4 billion, with profits from these operations exceeding $100 million before the COVID-19 pandemic. The Star's estimates indicated that from November 2016 to November 2022, high-risk customers generated approximately $1.33 billion in revenue. Justice Moore remarked that these figures “illustrate the potential to earn profits from a non-compliant approach” without directly linking benefits to illegal activities.
AUSTRAC, the federal agency overseeing financial intelligence, described The Star's breaches as both systemic and severe. AUSTRAC's Chief Executive Brendan Thomas stated that “the penalty reflects the seriousness of the contraventions” while building upon prior state and federal fines to serve as a deterrent.
He elaborated on The Star's inadequate revenue flow management during gambling, stating, “The court found The Star did not simply fail to complete the right checks. It allowed high-risk customers to gamble without properly establishing where their money came from, putting profit over compliance on a large scale.” Thomas criticized The Star for running a “private casino within its casino” with inadequate oversight, which enabled access for excluded customers and facilitated junket operations despite known risks. He concluded, “We will not tolerate companies putting profit over their obligations to the Australian community.”
Legal challenges and penalties for The Star have persisted for years. In 2022, AUSTRAC initiated civil proceedings against the company, resulting in a ruling by the Federal Court that two former senior executives breached the Corporations Act 2001 through failures in managing and reporting risks related to money laundering and criminal activities.
AUSTRAC had proposed potential fines of up to $400 million for The Star following the civil proceedings, but Justice Moore noted that the imposed AU$260 million penalty took into account previous fines totaling $200 million paid by The Star, along with license suspensions and the appointment of an external manager.
Recently, the New South Wales Independent Casino Commission (NICC) announced the extension of The Star Sydney's casino license until summer 2027, with external manager Nicholas Weeks remaining in position. The NICC acknowledged steps taken by The Star Sydney toward improvement, yet indicated that the responsibility for this extension lay with the parent company.
Conversely, The Star Gold Coast had its license suspension deadline extended to 2027 following recommendations from Weeks, marking a stark contrast in outcomes between the two properties.
