Australia’s anti-money laundering regulator has launched a federal court action against Star Casinos, which could wind up costing the company billions of dollars in fines.
AUSTRAC has commenced civil penalty proceedings in the Federal Court against the Star for alleged serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws.
The regulator alleges the Star did not take laws around anti-money laundering and terrorism financing (ML/TF) seriously enough, despite “known and serious ML/TF risks”.
According to AUSTRAC, this lack of appropriate measures allowed the Star to take money from high-risk channels without adequately assessing whether the source of the funds was illicit.
“In the absence of these risk-based controls, the Star Entities were vulnerable to criminal exploitation,” the statement of claim alleges.
“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.”
These allegations could see the Star hit with fines of between $18 million and $22 million per breach, according to court documents.
With AUSTRAC’s claims totalling 1,189 alleged contraventions of one law and 325 of another, the fines could add up to billions of dollars, according to the ABC.
“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,” said AUSTRAC CEO, Nicole Rose.
“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.”
Rose said the lack of appropriate controls and processes prevented the Star from appropriately managing high-risk customers.
These failings allegedly facilitated the movement of money in non-transparent ways making the Star vulnerable to criminal exploitation.
The Star said in a statement that it takes its anti-money laundering obligations seriously and has co-operated with AUSTRAC during the investigation.
The Star’s managing director and CEO Robbie Cooke said the company is transforming its culture and its business.
“We are committed to improvement but there is a lot still to do. Our goal is to earn back the trust and confidence of AUSTRAC and all our regulators,” he said.
“We will continue to work with AUSTRAC as we build a better, stronger and more sustainable company.”
The proceedings follow damning revelations made in a joint investigation by news program 60 Minutes, The Sydney Morning Herald and The Age into the Star in October 2021 claiming the group had cultivated high-rollers who were allegedly associated with criminal or foreign-influence operations.
At the centre of the revelations is a 2018 audit report prepared by KPMG and presented to the Star’s board’s audit committee which set out deficiencies in the Star’s systems and processes, noting, among other things, that there was “inadequate resourcing in place to operate the AML/CTF Program” and that its risk assessment system “does not consider terrorism financing as required by the AML/CTF Act”.
In response to those media reports, the Star’s share price declined by about 25 per cent, wiping more than $1 billion from the company’s value.
As a result, a spate of class actions have been launched against the Star on behalf of investors.