Star Entertainment ordered to pay A$260m for AML breaches
An Australian federal court has imposed a A$260 million penalty on Star Entertainment after finding the casino operator let high-risk customers gamble without properly checking the source of their funds.
Star Entertainment Group must pay A$260 million (US$183 million) after a federal court in Australia ruled the company had systematically breached anti-money laundering and counter-terrorism financing laws, Casino.org News reported.
Justice Cameron Moore, delivering the judgment on 28 October, found that a substantial part of Star's business relied on ignoring customers who posed a high risk of laundering money or financing terrorism.
Moore said casinos have a clear financial motive to minimise scrutiny of incoming funds, noting that revenue can rise sharply when cash flows from domestic and overseas sources face little friction.
The ruling follows state-level inquiries launched in New South Wales and Queensland in 2021 into whether Star's venues, which include The Star Sydney, The Star Gold Coast and The Star Brisbane, were meeting their compliance obligations.
Those inquiries led to a A$200 million penalty against the operator in 2022 after investigators concluded the casinos had failed to prevent money laundering and terrorism financing.
AUSTRAC, Australia's financial intelligence and regulatory agency, brought civil penalty proceedings against Star in the Federal Court in November 2022, seeking a A$400 million judgment. Star had argued for a A$100 million penalty.
AUSTRAC chief executive Brendan Thomas said the court's findings went beyond a failure to carry out proper checks, concluding that Star let high-risk customers gamble without establishing where their money came from and prioritised profit over compliance on a large scale.
Thomas added that AUSTRAC will not tolerate companies that put profit ahead of their obligations to the Australian community.
During the proceedings, Star acknowledged it had generated more than A$1.3 billion in gross gaming revenue from high-risk customers between November 2016 and November 2022.
Moore concluded that Star kept accepting and profiting from funds that available evidence suggested were most likely linked to criminal activity and laundering.
Star has since undergone a corporate restructuring and is now controlled by US-based Bally's Corporation. Speaking at the company's annual general meeting on 27 October, Star and Bally's chairman Soo Kim told shareholders the business had achieved full AML/CTF compliance since the takeover.
Kim said Star has adopted anti-money laundering, know-your-customer and safer gambling standards set by regulators in New South Wales and Queensland, describing them as the highest in the industry.
He also told shareholders all three Star properties are now EBITDA-positive and that cash reserves are building, calling it a markedly different position than nine months earlier.
Following Moore's judgment, Kim told the Australian Financial Review that Star has the financial capacity to pay the A$260 million penalty.