Star Entertainment ordered to pay A$260m in AUSTRAC money laundering case

A$260 million (about US$182 million to US$183m) is what Australia’s Federal Court has told The Star Entertainment Group to pay for breaking anti-money laundering and counter-terrorism financing (AML/CTF) rules. Justice Cameron Moore delivered the judgment on Wednesday, 28 October, closing a civil case that AUSTRAC started in November 2022.

The penalty lands between the two positions put to the court. Casino.org reported that AUSTRAC asked for A$400 million while Star argued for A$100 million.

What did the court find against Star?

According to iGaming Business, Justice Moore found that Star “failed to maintain a compliant AML/CTF programme and failed to monitor customers to identify, mitigate and manage money laundering and terrorism financing risks”. The breaches covered weak checks on customer identity and sources of funds, and too little ongoing monitoring of what customers were doing.

The court also found that Star took cash deposits and other transactions from third parties and never noted who they were. Customers kept access to private gaming rooms even after suspicious activity had been observed. More than 1,200 customers were able to play through “high-risk channels” without adequate safeguards, iGaming Business said. All of this made it harder for AUSTRAC and law enforcement to trace illicit funds.

The judge was blunt about the money. “Casinos stand to benefit handsomely if the inflow of money, including cash, from domestic and overseas sources, can occur with limited friction and limited scrutiny,” Moore said, according to Casino.org. He also said Star “continued to receive and profit from money that evidence available to it suggested was most likely from criminal activity and was being laundered.”

How much money was involved?

Star admitted in court that high-risk customers brought it more than A$1.3 billion in gross gaming revenue from November 2016 to November 2022. iGaming Business put the company’s own estimate at roughly $1.33 billion. It also reported that junket-linked revenue passed $1.4 billion, and that junket profits before Covid topped $100 million.

Moore said those figures “illustrate the potential to earn profits from a non-compliant approach”, but they do not directly measure benefits from illegal conduct. He explained that A$260 million, rather than the A$400 million AUSTRAC wanted, took account of the A$200 million in earlier penalties Star had already paid, plus licence suspensions and an externally appointed manager.

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.

Brendan Thomas, AUSTRAC chief executive

Thomas added: “We will not tolerate companies putting profit over their obligations to the Australian community.” iGaming Business also quoted him describing a “private casino within its casino”.

What does Star say, and what happens next?

Star is now controlled by US-based Bally’s Corporation. A day before the ruling, Star chairman Soo Kim, who also chairs Bally’s, told the annual general meeting the company is fully AML/CTF compliant after the takeover. He said all three Star casinos are operating positively on EBITDA and that “cash is now building.”

“Quite a different story than just nine months ago,” Kim said. Speaking to the Australian Financial Review after the judgment, he confirmed the company can cover the A$260 million bill.

The penalty is the latest chapter in a long saga. Inquiries by the New South Wales and Queensland states began in 2021, and two former senior executives were found in the same civil proceedings to have breached the Corporations Act 2001. Last month, the NSW Independent Casino Commission extended The Star Sydney’s licence until summer 2027, with Nicholas Weeks staying on as external manager, according to iGaming Business. The Star Gold Coast’s licence suspension deadline was also pushed to 2027 on Weeks’ advice.

For anyone following gambling regulation across the Tasman, the ruling shows how a regulator can stack Commonwealth penalties on top of state ones, while the court weighs what has already been paid.