The Federal Court has ruled against The Star Entertainment Group, imposing a penalty of AU$260 million (approximately $182 million) for violations of Australia’s anti-money laundering and counter-terrorism financing legislation. This substantial ruling arises from protracted civil proceedings and extensive investigations into the company's operations in Queensland and New South Wales.
Justice Moore, who delivered the judgment on Wednesday, highlighted significant compliance failures at The Star. She stated that the company did not maintain an adequate AML/CTF program and had a poor track record for monitoring customers to identify and manage risks associated with money laundering and terrorism financing.
Among the breaches identified were the inadequate verification of customer identities and their sources of funds. The court noted deficiencies in due diligence and ongoing customer activity monitoring. Furthermore, The Star permitted transactions and cash deposits from third parties without properly recording their identities and allowed continued access to private gaming rooms despite suspicious activities.
These shortcomings posed substantial challenges for AUSTRAC and law enforcement in tracking illicit funds and disrupting criminal activities effectively. The court reported that over 1,200 customers were allowed to gamble through "high-risk channels" without adequate AML/CTF safeguards. Revenue connected to junket operations was noted to exceed $1.4 billion, with pre-pandemic profits from junkets over $100 million. The Star estimated that revenue derived from high-risk customers between November 2016 and November 2022 was around $1.33 billion.
Justice Moore remarked that these figures “illustrate the potential to earn profits from a non-compliant approach,” though they do not specifically quantify benefits obtained from illegal actions.
AUSTRAC, which is responsible for enforcing financial intelligence regulations, characterized the breaches as both systemic and severe. AUSTRAC Chief Executive Brendan Thomas stated that the penalty underscores the seriousness of the violations and builds on prior state and Commonwealth fines. He criticized The Star for permitting high-risk customers to gamble without adequately verifying the sources of their money, prioritizing profits over compliance.
Thomas remarked, "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 and put profit over compliance on a large scale."
He expressed concern about The Star operating a "private casino within its casino," with inadequate oversight and continued access for excluded customers, as well as allowing junket operations despite known risks. He declared that AUSTRAC would not condone companies prioritizing profit over their societal obligations.
This ruling adds to the lengthy history of penalties and proceedings for The Star, including actions against its parent company and subsidiaries. In 2022, AUSTRAC initiated civil proceedings against The Star, resulting in the Federal Court finding two former senior executives guilty of breaching the Corporations Act 2001 due to their mismanagement of money laundering and criminal activity reporting.
While AUSTRAC suggested potential fines of up to $400 million, Justice Moore explained that the AU$260 million penalty considered the prior $200 million in fines already paid by The Star, along with license suspensions and the appointment of an external manager. Recently, the New South Wales Independent Casino Commission announced that The Star Sydney would have its casino license extended until summer 2027, with Nicholas Weeks continuing as the external manager. While recognizing The Star Sydney's progress, NICC indicated that the parent company was responsible for the extension.
In contrast, The Star Gold Coast faced a license suspension deadline moved to 2027 following counsel from Weeks as well.
