Dirty money churn becomes a nightmare for Star

After years of allegedly facilitating money laundering the walls are closing in on Star Entertainment, posing a mighty headache for the casino operator’s newly minted CEO Robbie Cooke.

With two shareholder class actions afoot, the financial crimes regulator AUSTRAC has now mounted a civil court action, and it looks like the corporate watchdog ASIC is also ready to pounce on Star.

Years of resource-draining litigation lie ahead for Cooke and his team, which is in the early stages of engineering a costly internal rehabilitation.

The Star Entertainment CEO Robbie Cooke at the Darling Hotel.
The Star Entertainment CEO Robbie Cooke at the Darling Hotel.Credit:Louie Douvis

It will now be up to the courts to put a price on Star’s alleged failure to manage patron risks that AUSTRAC says, “exposed the Australian and global financial system to systemic money laundering and terrorism financing risk over many years.”

Star has already been issued what is effectively a corporate “yellow card” from the NSW and Queensland gaming regulators, which found the company unsuitable to hold a licence in either state. Star was, however, still allowed to continue trading under supervision.

Ben Heap, chairman of The Star.
Ben Heap, chairman of The Star.Credit:Quentin Jones

Defending against AUSTRAC’s action while acknowledging previous failures will be the tightrope Cooke and chairman Ben Heap need to walk together. The margin for error will be razor-thin, with doing whatever it takes to retain its NSW and Queensland licences the top priority.

The avalanche of regulatory action against Star is a repeat of that endured by Crown Resorts. However, ASIC’s involvement adds an extra sting in the tail. The corporate watchdog investigated Crown and its directors but abandoned the case primarily because potential offences were too old and not legally fit for successful prosecution.

That outcome was met with community outrage and Star, which means Star and potentially its former executives and board may not be as lucky.

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ASIC chairman Jo Longo won’t want to endure another round of abuse for failing to act, but will presumably come up against the same problem that some potential offences are a bit long in the tooth.

Earlier this year, Longo insisted that letting 10 former Crown Resorts directors and senior executives off the hook for possible legal breaches, while running the James Packer-backed casino giant, was the “right call”. He is likely to be less charitable this time around.

Meanwhile, investors in Star will look to Crown’s books to get a taste of the full costs it may have to bear for the misconduct and rectification.

Crown’s results, released earlier this week, showed regulatory costs coming in at $617.2 million, including provisions for its own looming AUSTRAC enforcement investigation and penalties from other regulators.

Holding on to its NSW and Queensland licences will be the top priority for Star Entertainment.
Holding on to its NSW and Queensland licences will be the top priority for Star Entertainment.

Crown has already been handed a $120 million penalty for failing to encourage responsible gaming at its Melbourne casino by the Victorian Gambling and Casino Control Commission (VGCCC) earlier this month, bringing its Victorian penalties to $200 million. Meanwhile, the NSW Independent Casino Commission imposed a record $100 million fine on Star earlier this year.

AUSTRAC alleges that Star failed to carry out appropriate due diligence on its customers, leading to widespread and serious non-compliance over a number of years. The alleged lack of risk controls made the casino vulnerable to criminal exploitation, according to AUSTRAC.

It added that the casino group recorded a combined turnover exceeding $125 billion from junkets between November 2016 and October 2020, in its statement of claim lodged with the Federal Court on Wednesday.

The court document alleges that from December 2016 to February 2022, 1,087 customers of Star Sydney and 238 customers of Star Qld remitted money through high risk channels, the value of these transactions was $617 million, and they gave rise to 1,325 contraventions of the law.

With each contravention capable of attracting a penalty of up to $22 million, the zeroes could potentially pile up very quickly for Star.

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Source: Thanks smh.com