AUSTRAC commences civil proceedings against The Star

The Entertainment is accused of serious, systemic AML breaches.

Australia.- The Australian Transaction Reports and Analysis Centre (AUSTRAC) has announced that it has commenced civil penalty proceedings against The Star Pty Limited and The Star Entertainment QLD Limited. The Federal Court statement of claim alleges serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

This civil case follows AUSTRAC’s industry-wide compliance campaign, which commenced in September 2019, and an enforcement investigation into The Star Pty Limited, which commenced in June 2021. In January 2022, the investigation was expanded to include The Star Entertainment Qld Limited and other star entities.

In its investigation, AUSTRAC worked with state and federal agencies with regulatory interests in star entities, including the NSW and Queensland gaming regulators and ASIC. It says that in the absence of risk-based controls, the Star was vulnerable to criminal exploitation, which in turn exposed the Australian and global financial system to systemic ML/TF risk for many years.

AUSTRAC CEO Nicole Rose said: “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.”

AUSTRAC alleges 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 AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which they were exposed.
• Failed to establish an appropriate framework for board and senior management oversight of the AML/CTF programs.
• Did not have a transaction monitoring programme 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.
• Permitted 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.

Rose added: “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.”

As the matter is currently before the court, AUSTRAC said it will not comment further on the enforcement action or the details provided in the court documents.

In a stock exchange filing, The Star Entertainment Group said it takes its anti-money laundering obligations seriously and has co-operated with AUSTRAC during the investigation in relation to requests for information and documents.

The Star’s Managing Director and CEO Robbie Cooke added: “We are transforming our culture, transforming our 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. We will continue to work with AUSTRAC as we build a better, stronger and more sustainable company.”