AUSTRAC begins civil claim against Star for “serious” AML breaches

AUSTRAC, Australia’s financial watchdog, has filed civil proceedings against the Star Entertainment Group for “serious and systemic” breaches of anti-money laundering and counter-terrorist financing laws.

The complaint was filed in the Federal Court against The Star Pty and The Star Entertainment QLD, AUSTRAC said in a statement that gave no indication of the size of the claim. 

The penalty proceedings follow a compliance campaign that began across the industry in Sept. 2019 and led to an enforcement investigation into The Star in June last year. 

The regulator detailed allegations including failure to properly assess AML and terrorism risks and to identify and respond to changes over time. 

The group did not include appropriate risk-based systems and controls to manage the risks and it failed to establish a proper framework for board and senior management oversight of claims amongst other failures.

High risk clients

This lack of adequate oversight resulted in customers being able to move money through payment channels that were non-transparent and involved high AML risks.

The operator also failed to understand the sources of money moving through the channels, or whether there was a risk the funds were illicit. 

It also failed to consider whether it was appropriate to continue a business relationship with higher risk customers. 

“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 CEO Nicole Rose said. 

“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.”

Responding to AUSTRAC’s claim, The Star said it takes its AML responsibilities seriously and has cooperated with the regulator.

“We are transforming our culture, transforming our business,” Star CEO Robbie Cooke said. “We are committed to improvement but there is still a lot to do.”

Australia’s casinos were thrown into the regulatory spotlight following an investigative news report by local media in 2019. The report highlighted disarray in Crown Resorts’ governance practices that had allowed money to be laundered through its Sydney casinos. 

Those inquiries were extended to Star, which was found unsuitable to operate its properties in Sydney and Queensland. 

The New South Wales regulator in October handed Star a $100 million fine for its compliance problems.