AUSTRAC has commenced civil penalty 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 counter-terrorism financing (AML/CTF) laws.
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.
Throughout the investigation, AUSTRAC has 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 business and the community from criminal exploitation.
“Criminals will always seek to exploit the financial system to launder their money and harm the community. Businesses, as the front line of defence of our financial system and our communities, are often the first to be alerted to criminal activity.”
“AUSTRAC’s investigation identified a multitude of issues including poor governance and failures of risk management and to have and maintain a compliant AML/CTF program.”
“The Star Entities also failed to carry out appropriate ongoing customer due diligence which has led to widespread and serious non-compliance over a number of years,” Ms Rose said.
AUSTRAC’s allegations are extensive and include that the Star Entities:
- Failed to appropriately assess the money laundering and terrorism financing (ML/TF) risks they faced, including the likelihood and impact of those risks, and to identify and respond to changes in risk over time.
- Did not include in their AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which the Star Entities were reasonably exposed.
- Failed to establish an appropriate framework for Board and senior management oversight of the AML/CTF programs.
- 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.
- Did not have an appropriate enhanced customer due diligence program to carry out additional checks on higher risk customers.
- Did not conduct appropriate ongoing customer due diligence on a range of customers who presented higher money laundering risks.
In the absence of appropriate ML/TF risk oversight, the Star Entities:
- Permitted their customers to move money through payment channels that were non-transparent and involved high ML/TF risks.
- Did not understand the sources of money moving through these channels or whether there was a risk that the source of funds was illicit.
- Failed to consider whether it was appropriate that they continue an ongoing business relationship with higher risk customers.
In the absence of these risk-based controls, the Star Entities were vulnerable to criminal exploitation. Star’s failure to manage the ML/TF risks of its business in turn exposed the Australian and global financial system to systemic ML/TF risk over many years.
Ms Rose said the lack of appropriate controls and processes prevented the Star Entities from appropriately managing high risk customers. These failings facilitated the movement of money in non-transparent ways making the Star Entities vulnerable to criminal exploitation.
“AUSTRAC continues to work with the Star Entities to ensure they comply with their obligations under the law, 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 that are before the court.
AUSTRAC will not provide further comment on the enforcement action or the details provided in the court documents as the matter is now before the court.