A federal judge has slapped one of Australia’s largest casino operator with a hefty penalty over ‘egregious’ anti-money laundering violations while warning other industry players non-compliance is ‘not worth the risk’.
The Federal Court of Australia has fined The Star Entertainment Group 260 million Australian dollars (£137 million) over “widespread and systemic” breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
Handing down judgment today (28 October), Justice Moore held that the casino giant had built a business dependant on “turning a blind eye” to high-risk customers and on services facilitating seamless money transfers that gave rise to significant money laundering and terrorism financing risks.
While previous regulatory interventions stopped the judge from levying the 400 million Australian dollar (£212 million) penalty sought by the Australian Transaction Reports and Analysis Centre (AUSTRAC), he considered that the company’s contraventions warranted a very significant fine, not least to send a message to other casino operators that putting profit over AML/CTF compliance is simply “not worth the risk”.
The violations
AUSTRAC sued Star’s Sydney and Queensland subsidiaries in November 2022 over allegations of AML/CTF Act violations.
The court found that, between November 2016 and November 2022, Star Sydney had failed to monitor 102 high-risk customers and a further 1,088 customers who transacted through higher money laundering and terrorism financing risk channels.
Star Queensland failed to monitor 77 high-risk customers and a further 250 customers transacting through higher-risk channels or subject to New South Wales exclusion orders.
Justice Moore drew attention to the particular vulnerability of casinos to money laundering, pointing to the significant volume of cash transactions and the movement of international funds without the need for a cross-border transfer, as well as their clientele, which often includes high-risk money laundering customers, politically exposed persons and those from foreign jurisdictions.
The penalty
Star argued that it would be unable to pay any penalty higher than 100 million Australian dollars (£53 million) over concerns about the ongoingsuggestion as “wholly inadequate” and “no more than Star’s cost of doing business”. It claimed that the penalty should stand at 400 million Australian dollars
The judge slammed Star for putting “profit over compliance” and doing so “on a large scale”, noting that it had actively encouraged high-risk and excluded customers to attend its casinos. By Star’s own calculation, revenue from high-risk customers alone during the contested period totalled approximately 1.33 billion Australian dollars (£704 million).
With casinos standing to “benefit handsomely” where transactions occur with “limited friction and limited scrutiny”, deterrence was a critical factor in Justice Moore’s assessment of the fine.
Nevertheless, the judge held that Star had already been hit with penalties totalling 200 million Australian dollars (£106 million) for similar conduct, while its casino licences had been suspended and the company placed under the supervision of a manager. Ruling that Star had “already paid a significant price for the contravening conduct”, Justice Moore concluded that tighter regulatory scrutiny warranted a penalty reduction.
Star Sydney will now pay 195 million Australian dollars (£103 million) for its contraventions. Star Queensland owes the remaining 65 million Australian dollars (£34 million).
Justice Moore said the penalty would still serve as a strong warning to other casino operators, given that without regulatory intervention, the fine for Star would have been significantly higher.
AUSTRAC CEO Brendan Thomas commented: “The court found The Star did not simply fail to complete the right checks. It allowed high-risk customers to gamble without properly establishing where their money came from and put profit over compliance on a large scale.”
“AUSTRAC will not tolerate companies putting profit over their obligations to the Australian community,” Thomas added.
Star Entertainment did not immediately respond to ICLG News’ request for comment.
