AUSTRAC takes Star Entertainment to court
The financial watchdog is taking Star Entertainment to Federal Court, launching civil penalty proceedings against the embattled casino operator for alleged systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws.
AUSTRAC launched an industry-wide compliance campaign in 2019 and opened an enforcement investigation into The Star in June 2021, following an investigation by this masthead that uncovered extensive criminal activity.
AUSTRAC has commenced civil penalty proceedings against The Star. Credit:Oscar Colman
Two independent inquiries in NSW and QLD found The Star unfit to hold its casino licences earlier this year as well as determining the group had a deep-rooted cultural problem that developed due to poor governance.
AUSTRAC said it had worked closely with the state and federal regulatory bodies to commence its civil penalty proceedings.
The watchdog’s chief executive Nicole Rose said their investigation had identified a number of issues including poor governance, failures to manage financial risk, as well as poor anti-money laundering and counterterrorism financing compliance.
AUSTRAC CEO Nicole Rose. Credit:Alex Ellinghausen
“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,” Rose said.
AUSTRAC added The Star’s casinos were “vulnerable to criminal exploitation” and the group’s failure to manage the risks had exposed Australia and the global financial system to the potential of systemic money laundering and terrorism over many years.
The watchdog has alleged extensive mismanagement took place at The Star’s entities including failing to establish an appropriate board framework, failing to conduct due diligence on a range of high-risk customers, and failing to establish a fitting transaction monitoring program to monitor transactions and identify suspicious activity.
Rose said it was clear a lack of appropriate controls had prevented the casino group from appropriately managing high risk customers and had facilitated the movement of money in non-transparent ways.
Whether a civil penalty order is made will be determined by the court. AUSTRAC did not comment further as the matter is now before the court.
The Star’s chief executive Robbie Cooke said the new management was working to transform the company’s culture and business practices.
“We are committed to improvement but there’s a lot still to do,” he said.
“Our goal is to earn back the trust and confidence of AUSTRAC and all our regulators,” Cooke continued, adding the group is reviewing the watchdog’s statement of claim.
The Star Entertainment CEO Robbie Cooke at the Darling Hotel.Credit:Louie Douvis
The casino group was savaged by shareholders at its annual general meeting last week, with almost 30 per cent voting down its proposed remuneration report after a “disastrous” year.
Chairman Ben Heap issued a mea culpa to shareholders last month, pleading for a chance to demonstrate the casino giant could turn over a new leaf and implement a complete cultural overhaul.
Since the findings, The Star has replaced its chairman and chief executive as well as a number of board members. About 20 executives have left the group since former chief executive Matt Bekier resigned in March.
Cooke formally took the reins last month, on the same day the NSW regulator stripped the group’s Sydney casino licence, implemented independent manager Nicholas Weeks and imposed a record $100 million fine.
The group expects the cost of remediation to range from $35 million to $45 million this financial year, with roughly half to continue after the 2024 financial year.
The revenue of Star’s flagship Sydney casino has collapsed 11 per cent since July.
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