Star Entertainment Group Potentially Teetering Due to Possible $400M Anti-Money Laundering Penalty Imposed by AUSTRAC
In a significant move, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has announced plans to impose a hefty fine of $400 million on Star Entertainment for systemic anti-money laundering (AML) failures linked to its business dealings with Suncity, a junket operator with ties to organized crime.
Star Entertainment's association with Suncity and its former chairman, Alvin Chau, has been under scrutiny since Chau's arrest in Macau in 2021 for criminal activities. Despite internal and external warnings about Suncity’s links to Chinese organized crime and money laundering that surfaced as early as 2019, Star continued its business relationship with the operator.
AUSTRAC alleges that Star allowed over 100 high-risk customers to launder billions of dollars through its casinos during the specified period. Evidence presented includes Star granting a customer, with confirmed links to foreign criminal syndicates, a cheque cashing facility worth $266.7 million and permitting wire transfers of $250,000 to individuals with no gambling history with the company.
The operational lapses within Star’s casino operations in Sydney, Brisbane, and the Gold Coast between 2016 and 2020 are highlighted by the case. At Star’s casino, Suncity ran an exclusive high-roller room called Salon 95, which operated under minimal direct oversight from Star’s management. This room handled large cash transactions in suitcases, backpacks, and cooler boxes. Star staff reportedly packaged cash in separate bags, covered transactions from CCTV cameras with blankets, and handed out cash to third parties, effectively facilitating money laundering.
The legal and financial implications of these failures are severe. AUSTRAC’s counsel Simon White SC described the $400 million penalty as appropriate, not excessive, emphasizing the seriousness of Star’s "manifest" failures and the deliberate courting of money laundering risks by Star's leadership. The case is being overseen by Justice Cameron Moore with hearings ongoing.
The fine reflects the gravity of these failures and AUSTRAC’s enforcement stance on AML compliance in the gambling industry. This case represents one of the most significant AML enforcement actions in Australia's casino sector, following a precedent set by AUSTRAC’s $450 million settlement with Crown Resorts in 2023 for similar compliance failings.
Meanwhile, Lucas Dunn, a New Jersey-born and raised copywriter, has been reporting on the gambling industry for over six years. Known for his thoroughness and accuracy in reporting, Dunn's content has been published in various news outlets. He now writes full-time and occasionally doubles as a painter, following in his father's footsteps. Dunn's reviews and articles provide detailed insights and analyses of the gambling industry, encompassing casino, software provider, and game reviews, news, and blogs.
In response to the fine, Star Entertainment has warned that the penalty could threaten the company’s survival and trigger financial instability. Confidential court hearings involving Star’s CFO have revealed concerns about the company's ability to withstand the penalty, which could also affect lender negotiations and investor confidence. This environment has even caused partners like Bally’s Corporation to consider withdrawing from rescue plans for Star.
As the case unfolds, the eyes of the gambling industry and regulators worldwide will be on Australia, watching closely as AUSTRAC continues to enforce strict AML regulations.
[1] AUSTRAC media release, 2023. [2] The Sydney Morning Herald, 2023. [3] The Age, 2023. [4] The Australian Financial Review, 2023.
- Despite operating slot machines in its casinos, Star Entertainment faces financial instability due to a potential $400 million fine for systemic anti-money laundering failures, which have been linked to its business dealings with Suncity, an online casino operator with ties to organized crime.
- The ongoing case against Star Entertainment highlights the significance of crime-and-justice issues and the importance of enforcing stringent anti-money laundering regulations in the business sector, particularly within the gambling industry.
- In the face of the multi-million dollar fine, there are concerns about Star Entertainment's ability to maintain its financial stability, affecting lender negotiations, investor confidence, and even negotiation with partners such as Bally’s Corporation in the general-news context.
