AUSTRAC CEO Brendan Thomas has admitted some frustration at the lengthy amount of time it is taking Australia’s Federal Court to deliver a verdict on the civil case brought by the country’s AML regulator against Star Entertainment Group but reiterated that taking legal action was essential given the serious nature of the matters at hand.
The case was first presented in November 2022, with AUSTRAC alleging serious and systemic non-compliance by Star with Australia’s AML/CTF laws. The allegations are broadly in line with the findings of the first Bell inquiry into Star’s association with organized crime via its partnership with Asian junket operators like Suncity Group. Star’s flagship property, The Star Sydney, has had its license suspended since 2022 as a result.
The AUSTRAC allegations include that the Star entities failed to appropriately assess the money laundering and terrorism financing (ML/TF) risks they faced including the likelihood and impact of those risks; did not include in their AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which they were reasonably exposed; failed to establish an appropriate framework for Board and senior management oversight of the AML/CTF programs; did not have a transaction monitoring program to monitor transactions and identify suspicious activity that was appropriately risk-based or appropriate to the nature, size and complexity of the Star entities; did not have an appropriate enhanced customer due diligence program to carry out additional checks on higher risk customers; and did not conduct appropriate ongoing customer due diligence on a range of customers who presented higher money laundering risks.
In the absence of such oversight, AUSTRAC alleged that the Star entities permitted their customers to move money through payment channels that were non-transparent and involved high ML/TF risks; did not understand the sources of money moving through these channels or whether there was a risk that the source of funds was illicit; and failed to consider whether it was appropriate that they continue an ongoing business relationship with higher risk customers.
The lengthy delay in any court determination in the civil case has proved a point of frustration for AUSTRAC and Star alike, giving rise to speculation over the potential scale of any financial penalty given Crown reached a AU$450 million agreement with the regulator in 2023 for its own transgressions.
Asked by IAG about the delayed verdict following a keynote address at the Regulating the Game conference in Sydney on Wednesday, Thomas said, “It’s not the fastest process in the world, the timeframes match that and our legal case in the Star matter was fully completed last year. The last submissions from us were in August or thereabouts, so we’re still sitting and waiting for that determination.
“[Star] has changed significantly since then. I won’t say too much about risk, but there’s a question about risk and whether risk is still there or not, but nevertheless if you read our statement of claim, you can see our allegations are incredibly serious. We allege that the amount of criminality that occurred in that business was exponentially huge and the severity of the criminality that took place was similarly huge.
“While it’s taking a long time, from our point of view as a legal regulator, we can’t turn a blind eye to that sort of egregious activity.
“Unfortunately, it is taking a long time to resolve and it is expensive for everybody. It takes significant resources from us. If you read the statement of claim we make in those cases they sometimes take years to continue. They are incredibly detailed and we need to prove every allegation independently and individually. They are incredibly labor-intensive activities.
“I can’t say too much on the nature of it because it is still before the court but hopefully we get a decision soon.”
While that matter is still pending, the Federal Court did deliver a related verdict last week when it found that former Star Entertainment Group CEO and Managing Director Matt Bekier and former Chief Legal & Risk Officer Paula Martin breached their statutory duty under the Corporations Act by failing to exercise due care and diligence in their dealings with Suncity Group and regarding transactions with the National Australia Bank.
Proceedings brought by the Australian Securities and Investments Commission (ASIC) against seven other directors, including former Chairman John O’Neill, were dismissed with the court finding ASIC had failed to prove breaches.
In comments made during Wednesday’s keynote address, Thomas also pointed out that much of AUSTRAC’s work in relation to investigating and taking enforcement action against Australia’s larger casino operators was now done, meaning smaller casinos are now in the regulator’s sights.
Australia is home to 13 casinos of which six are run by the big three operators in Crown Resorts, Star Entertainment Group and SkyCity Entertainment Group.
“We started looking last year at smaller casinos across Australia and we’ve asked a number of external auditors to examine the effectiveness of their controls,” Thomas explained. “We’re currently examining the outcomes of those audits. There is still work to do across that sector in terms of managing those controls, managing tax, managing incentives, getting effective identification of suspicious behavior and reporting that behavior.”
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