Federal court fines Star Entertainment A$260m for AML/CTF failures

A federal court in Australia ordered The Star Entertainment Group to pay A$260m for breaches of anti-money laundering and counter-terrorism financing (AML/CTF) law, in a decision handed down by Justice Cameron Moore on 28 October. The court found that Star had allowed high-risk customers to gamble without properly establishing the source of their funds.

Justice Moore said Star's inability to shield its gaming venues from organised crime and money laundering required a substantial monetary penalty. He said a significant part of Star's business depended on not scrutinising customers who presented a high money-laundering or terrorism-financing risk, and that casinos stand to benefit when money can flow with limited friction and limited scrutiny.

In the federal court proceedings, Star admitted that high-risk customers had produced gross gaming revenue above A$1.3bn for it across the period from November 2016 to November 2022. Justice Moore's conclusion was that the company kept taking in, and gaining from, funds which the material before it indicated were probably the proceeds of crime and were being laundered.

AUSTRAC, the Australian Transaction Reports and Analysis Centre, applied to the federal court for civil penalty proceedings against Star in November 2022. AUSTRAC sought a A$400m judgment, while Star petitioned for a A$100m fine.

Brendan Thomas, chief executive of AUSTRAC, said the court's finding went beyond a simple failure to carry out the correct checks: Star had let high-risk customers gamble without properly establishing the origin of their funds, and had placed profit above compliance on a large scale. According to Thomas, the regulator "will not tolerate companies putting profit over their obligations to the Australian community".

State inquiries in New South Wales and Queensland examined in 2021 whether the casino operator was complying with AML/CTF regulations. A year later, the company behind The Star Sydney, The Star Gold Coast and The Star Brisbane was ordered to pay a A$200m fine, after those investigations concluded that the casinos had not prevented money laundering and terrorism financing.

Following those inquiries the company restructured itself, and US-based Bally's Corporation now holds control of it. At the annual general meeting held on 27 October, Star Entertainment chairman Soo Kim, who also chairs Bally's, told shareholders that the business had reached AML/CTF compliance after the Bally's takeover, and he said it had adopted the anti-money laundering, customer due diligence and safer gambling standards set by regulators in New South Wales and Queensland. Kim added that EBITDA at the three Star casinos is now positive and that cash reserves are growing.

After the judgment, Kim told the Australian Financial Review that Star will be able to pay the A$260m fine.