The Star Entertainment Fined A$260 Million for Serious AML/CTF Breaches

The Federal Court of Australia has ordered The Star Entertainment Group to pay a A$260 million penalty for serious breaches of the country’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

Australian Transaction Reports and Analysis Centre (AUSTRAC) recently announced the ruling, following proceedings against the casino operator and its subsidiaries. The court found that The Star failed to maintain a compliant AML/CTF programme and did not properly identify, assess, and manage the financial crime risks associated with its customers.

The failures affected more than 1,200 customers who were able to gamble through channels carrying elevated money laundering and terrorism financing risks. These channels included cash deposits and third-party transactions where the identity of the person providing the funds was not recorded.

The court identified several serious weaknesses in The Star’s controls, including failures to:

• Verify customer information and establish the source of funds.
• Conduct appropriate customer due diligence, particularly for high-risk customers.
• Monitor customer activity and identify suspicious behaviour.
• Oversee private casino operations and higher-risk gambling arrangements.
• Intervene when junkets were involved in suspicious activities.

The case also involved customers who had been excluded from gambling in another Australian state but were still able to access The Star’s services.

The court examined the financial scale of the business during the period from November 2016 to November 2022. The Star reported approximately A$1.33 billion in revenue from high-risk customers during this period. Revenue from junkets exceeded A$1.4 billion, while their profits exceeded A$100 million in the pre-COVID years. The court noted that these figures illustrated the potential financial benefits of operating without adequate AML controls; they were not a measure of profits directly derived from the contraventions.

The A$260 million penalty follows earlier regulatory action, including A$200 million in penalties for conduct that significantly overlapped with the proceedings. The court also considered the suspension of casino licences and the appointment of a manager when determining the penalty.

AUSTRAC said the failures weakened the ability of regulators and law enforcement agencies to trace funds to their source, disrupt unlawful activity, and recover criminal proceeds.

Implications for compliance teams

The case demonstrates that having an AML programme on paper is not enough. Controls must work in practice, particularly when a business serves customers who present higher financial crime risks.

Compliance teams, especially those in casinos, gaming, banking, and other cash-intensive sectors, should focus on:

• Source-of-funds verification: Establish where customer money comes from, especially when large cash deposits or third-party payments are involved.
• Enhanced due diligence: Apply stronger checks to high-risk customers and review their activity throughout the business relationship.
• Transaction monitoring: Identify unusual gambling or payment patterns, including activity involving intermediaries and junket operators.
• Third-party oversight: Record and verify the identities of people providing funds on behalf of customers.
• Management accountability: Ensure senior management receives meaningful information about AML risks and acts when control weaknesses emerge.

The central lesson is that commercial interests must not override AML/CTF obligations. When high-risk customers are allowed to operate without effective checks, businesses and their wider financial systems can get exposed to serious financial crime risks.