Australian Court Orders The Star to Pay $183 Million for Serious Money Laundering Breaches

Key Takeaways

• Federal Court Penalty: The Star Entertainment Group has been ordered to pay approximately $183 million (AUD $260 million) for serious breaches of Australia's anti-money laundering and counter-terrorism financing laws.
• High-Risk Customer Failures: More than 1,200 customers gambled through high-risk channels, while the company failed to adequately verify customer information, establish sources of funds and monitor suspicious activity.
• Substantial Gambling Revenue: Junket operations generated more than $985 million (AUD $1.4 billion) in revenue, while high-risk customers accounted for approximately $936 million (AUD $1.33 billion) between November 2016 and November 2022.
• Previous Regulatory Penalties: The court considered approximately $141 million (AUD $200 million) in earlier penalties, suspended casino licenses and external management when determining the latest sanction.
• Consequences for Financial Crime Investigations: The court found that The Star's failures impeded efforts to trace suspicious funds, while inadequate monitoring left authorities unable to determine the full amount of money moved through its casinos by high-risk customers.

Deep Dive

More than 1,200 customers were allowed to gamble through high-risk channels at The Star Entertainment Group's Australian casinos, where cash deposits could be accepted from third parties without recording who had supplied the money.

The Federal Court ordered The Star to pay approximately $183 million (AUD $260 million) for serious breaches of Australia's anti-money laundering and counter-terrorism financing laws. The ruling followed findings that the casino operator had failed to maintain a compliant anti-money laundering program and properly monitor customers whose gambling activities presented significant financial crime risks.

Justice Moore found that a significant part of The Star's business had depended on disregarding those risks. The company continued receiving and profiting from money despite evidence available to it suggesting the funds most likely came from criminal activity and were being laundered.

The penalty adds to years of regulatory action against The Star, including earlier fines, suspended casino licenses and the appointment of external management. The Federal Court's findings also establish how the company's failures affected financial crime investigations. By failing to collect and examine information about customers and their money, The Star deprived Australian authorities of opportunities to trace suspicious funds, disrupt unlawful activity and recover criminal proceeds.

The Australian Transaction Reports and Analysis Centre (AUSTRAC), which brought the proceedings, said the breaches involved failures to verify customer information, establish the source of gambling funds, conduct appropriate due diligence and monitor customer activity.

Some of the gambling channels operated by The Star permitted third-party transactions and cash deposits without recording the identity of the person supplying the money. Others offered limited transparency over the origins of customer funds. These arrangements carried elevated money laundering risks, particularly where customers were already considered high risk.

Brendan Thomas, AUSTRAC's chief executive, said the company had placed its commercial interests ahead of its legal obligations.

"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," Thomas said.

The regulator also identified serious problems involving junket operators, which arrange gambling visits and services for casino customers. The Star allowed junkets continued access to private gaming rooms despite suspicious incidents, concerns within the company about their activities and the recognized money laundering risks associated with those arrangements.

Thomas said the company had permitted a private casino to operate within its casino without appropriate oversight. It also continued courting customers who had been excluded from gambling in another Australian state.

The extent of the suspicious financial activity remains uncertain. AUSTRAC said The Star's admitted monitoring deficiencies prevented authorities from determining how much money high-risk customers had moved through its casinos.

The Revenue Behind the Risk

The financial scale of The Star's relationships with junkets and high-risk customers featured prominently in the court's assessment. Junket operations generated more than approximately $985 million (AUD $1.4 billion) in revenue, while profits from junkets in the years before the COVID-19 pandemic exceeded approximately $70 million (AUD $100 million).

Between November 2016 and November 2022, revenue attributable to high-risk customers amounted to approximately $936 million (AUD $1.33 billion), according to The Star's own calculations.

The court did not treat those amounts as a measure of the financial benefit obtained from the breaches. Justice Moore instead cited them as evidence of the potential profits available to a casino that failed to enforce its anti-money laundering obligations.

Casinos have a strong financial incentive to accept large sums from customers with as little interference as possible, the judge observed. That incentive becomes particularly significant when substantial amounts of cash arrive from domestic and overseas sources.

In The Star's case, the court found that the company continued accepting money even when the evidence available to it suggested the funds were likely connected to criminal activity.

The failures were not confined to the absence of appropriate procedures. They involved the continued operation of gambling arrangements that exposed the company to known risks, including customer relationships and junket activities that warranted closer examination.

For financial crime investigators, the deficiencies created a further problem. Without adequate customer verification and transaction monitoring, authorities could not reliably establish the origins of funds passing through the casinos.

The Federal Court found that The Star's noncompliance had undermined the ability of AUSTRAC and law enforcement agencies to trace money, resulting in lost opportunities to interrupt unlawful activity and recover the proceeds of crime.

Those findings gave the breaches consequences beyond The Star's own regulatory obligations. The company had allowed gambling activity to continue under conditions that made it harder for authorities to investigate potentially criminal transactions.

Previous Penalties Weighed in Court's Decision

The latest ruling follows extensive regulatory scrutiny of The Star's operations in New South Wales and Queensland, where separate casino inquiries had already exposed serious compliance failures.

The company had previously received approximately $141 million (AUD $200 million) in penalties for conduct that significantly overlapped with the matters before the Federal Court. Its casino licenses had also been suspended, and its operations placed under the supervision of an appointed manager.

Justice Moore considered those consequences when determining the additional penalty, acknowledging that The Star had already paid a substantial price for its conduct.

AUSTRAC said the approximately $183 million (AUD $260 million) penalty reflected the seriousness of the federal breaches while accounting for the financial and operational sanctions imposed through earlier state and Commonwealth proceedings.

Thomas said the additional penalty was intended to maintain a deterrent effect.

"AUSTRAC will not tolerate companies putting profit over their obligations to the Australian community," he said.

The regulator also acknowledged the work of its enforcement and regulatory partners, including the NSW Independent Casino Commission, whose investigations and oversight have contributed to efforts to improve governance and compliance across Australia's casino industry.

The Federal Court proceedings add a further account of the failures that brought The Star under sustained regulatory scrutiny. The company had continued dealing with customers and junket operators despite information indicating substantial financial crime risks, while deficiencies in its monitoring arrangements prevented authorities from establishing the full extent of the money involved.

That limitation remains even after the court's findings. AUSTRAC has established serious breaches of federal law, and The Star has been ordered to pay another substantial penalty. But the regulator still cannot determine how much money high-risk customers moved through the casinos because the monitoring needed to establish that figure was inadequate.

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