Last week, the Australian Transaction Reports and Analysis Centre (AUSTRAC) commenced civil penalty proceedings in the Federal Court of Australia against casino entities, The Star Pty Limited and The Star Entertainment QLD Limited, for alleged serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

AUSTRAC regulates over 14,000 individuals, businesses and organisations and in recent years has become one of Australia's most active regulators, both in terms of investigations and prosecutions.

AUSTRAC has alleged that the Star entities allowed over 1000 VIP patrons to launder billions of dollars of ‘dirty’ money through their Sydney, Brisbane and Gold Coast casino operations over a number of years. AUSTRAC is seeking a pecuniary penalty and costs.

The allegations are extensive and include that the Star Entities:

  • failed to appropriately assess the money laundering and terrorism financing risks they faced, including the likelihood and impact of those risks, and to identify and respond to changes in risk over time;
  • did not include in their AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which the Star Entities 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.

AUSTRAC launched proceedings in March 2022 against the Crown group, another large casino group in Australia. AUSTRAC has a very strong track record having secured a $1.3b penalty against Westpac in 2020 for serious breaches of AML/CTF legislation, and a $700m penalty against the Commonwealth Bank of Australia in 2018. The Westpac penalty is the highest civil penalty in Australian history.

Given these high-profile AML/CTF prosecutions, there will be increased pressure on the Australian Government to introduce ‘tranche 2’ AML/CTF laws, which will expand the scope of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) to legal professionals, accountants, real estate agents and trust and company service providers.

AUSTRAC CEO Nicole Rose said casinos must take their anti-money laundering obligations seriously to protect Australia’s financial system, their business and the community from criminal exploitation.