AUSTRAC begins legal proceedings against two Star casinos

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has commenced civil penalty proceedings against The Star Entertainment Group and two of its subsidiaries for alleged “innumerable” breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML-CTF). The financial crimes watchdog has added it is filing a case against Star Sydney and Star Queensland in the Federal Court.

In a statement by the AUSTRAC: “The civil penalty proceedings come after a proactive, industry-wide AUSTRAC compliance campaign that began in September 2019 and led to an enforcement investigation into The Star Pty Limited being opened in June 2021. In January 2022 the investigation was expanded to include The Star Entertainment Qld Limited and other Star entities.”

In the 2,000-page statement against the operator, the AUSTRAC noted there were “serious and systemic” breaches of AML-CTF laws due to failure to put in place mandatory money-laundering checks. Other allegations on the watchdog’s list include failure to conduct due diligence on its customers, failure to create a framework for management oversight of AML-CTF, lack of a transaction monitoring program to investigate suspicious activities, and failure to conduct a thorough money laundering and terrorism financing risk assessment.

In the statement of claim, the AUSTRAC detailed how the operator made financial transactions via “high-risk channels that were not subject to appropriate risk-based controls” and “permitted their customers to move money through payment channels that were non-transparent and involved high ML/TF risks”.

It added: “In the absence of appropriate controls, Star Sydney and Star Qld provided designated services to high-risk customers in circumstances where concerns should have been raised as to the legitimacy of their source of wealth or source of funds.”

As it stands, The Star Entertainment Group might be facing limitless fines. According to court filings, each breach of the law amounts to a fine of between $18 million and $22 million. AUSTRAC itself has been known for assigning huge fines to erring corporations.

The AUSTRAC’s fine is not a part of the penalties the operator will face with Queensland’s Office of Liquor and Gaming Regulation (OLGR) after being found guilty of AML-CTF charges and social responsibility failures. The operator has already been declared unfit to run a casino in New South Wales and has been fined a sum of $100 million.

Queensland’s OLGR is expected to follow suit, including placing a special manager over the company — as is the case at Star Sydney. Meanwhile, the company has informed its stakeholders to brace for the financial fallout in remediation costs of up to $29.9 million.

The operator responded to the statement of claim, noting that it takes its anti-money laundering obligations seriously and has co-operated with AUSTRAC during the investigation in relation to requests for information and documents.

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