Australia’s Financial Watchdog Confirms Civil Sanctions Against Star Entertainment Likely

Posted on: November 30, 2022, 07:00h. 

Last updated on: December 9, 2022, 09:18h.

In the wake of the money-laundering scandals that rocked Australia’s gaming industry, Star Entertainment continues to receive more bad news. The Australian Transaction Reporting and Analysis Center (AUSTRAC) filed a case against the ASX-listed gambling giant on Wednesday after concluding a joint investigation with police and regulators in New South Wales (NSW) and Queensland that began in September 2019.

Star Sydney
Star Entertainment’s logo welcomes guests outside the Star Sydney casino. The casino operator faces massive fines from AUSTRAC over alleged money laundering. (Image: The Australian)

Star Entertainment faces further civil penalties for allegedly allowing customers to move cash through unapproved, unregulated channels. It also continued to do business with “higher-risk customers” in violation of federal anti-money laundering laws, according to AUSTRAC.

The case comes after an NSW investigation resulted in Star being temporarily stripped of its casino license in October. It also received a record fine of AUD100 million (US$62.3 million) for its violations.

Civil Prosecution on the Table

AUSTRAC alleges that Star allowed customers to move money through questionable channels and didn’t perform due diligence on the source or destination of the funds. The company also allegedly conducted business with high-risk patrons with larger spending habits, while ignoring established safer gambling protocols.

Because of the number of alleged failings, the financial watchdog could hit the casino operator with civil penalties that reach “billions of dollars,” according to The Canberra Times. AUSTRAC cited at least 1,189 examples of violations at Star Sydney and another 325 at Star Queensland. Each carries a fine of at least AUD18 million (US$12.06 million).

AUSTRAC CEO Nicole Rose said in a statement that all casinos need to take anti-money laundering (AML) obligations seriously. The fines, which would be greater than those the entity sought from Crown Resorts over similar failings, are meant to send a clear message to the gaming industry.

Star’s troubles extend beyond NSW’s borders. Last month, the Queensland government told the company to explain why it should continue to hold a casino license in the state. It determined that Star is unsuitable as a licensed operator, but is still in the process of figuring out what actions to take.

Star CEO Robbie Cooke said the company is cooperating with AUSTRAC investigators and reviewing the allegations. He added that Star hopes to “earn back the trust and confidence” of the watchdog, as well as gaming regulators across the country.

Long Road Ahead

The latest announcement comes after the NSW Independent Casino Commission (NICC) said it doesn’t support the recently appointed independent monitor of The Star Sydney. The NICC had appointed Nicholas Weeks as special director to spearhead those efforts before Star brought in its own independent monitor. The commission wasn’t happy with the company’s selection.

Star, Crown, and other gaming operators face the possibility of continuing fines in Australia as changes in public perception of gaming are forcing regulators to clamp down.

To date, AUSTRAC has avoided going after casino operators on a large scale. The only time it penalized a gaming company was in 2017, when it ordered Tabcorp to pay AUD45 million (US$30.2 million) for AML failings.

That was well below the AUD702 million (US$470.97 million) it could have paid. The largest fine AUSTRAC has levied to date was AUD1.3 billion (US$872.17 million). It gave that penalty to financial institution Westpac in 2019.