Australia's financial crime regulator AUSTRAC aims to shut down Star Entertainment.
The agency is requesting a federal court to enforce a AU$400 million (US$260 million) penalty on the distressed casino operator, which in April accepted a AU$300 million (US$195 million) rescue package from Bally’s Corp. and Australian pub and slots tycoon Bruce Mathieson.
In November 2022, AUSTRAC initiated civil penalty proceedings against the company for purported violations of anti-money laundering (AML) and counter-terrorism financing regulations.
Delinquent Organizations
Star’s Sydney license has been revoked since 2022 after a regulatory investigation found it had permitted criminal organizations to launder money in exclusive high-roller junket areas.
The Bally’s-led rescue occurred on the exact day when cash-strapped Star was forecasted to deplete its funds entirely due to a severe liquidity crisis.
Star's license in Sydney has been on hold since 2022 after a regulatory investigation found it had permitted criminal organizations to use its facilities for money laundering in exclusive high-stakes junket rooms.
The operator also deceitfully allowed Chinese high rollers to withdraw a total of AU$900 million (US$586 million) for gambling via China UnionPay (CUP) credit cards while masking these transactions as “hotel expenses.”
At a Federal Court hearing on Wednesday, Simon White SC, representing AUSTRAC, contended that a penalty of AU$400 million would be warranted given the extent and length of Star's compliance failures. Star previously cautioned that a AU$100 million penalty might threaten its capacity to operate as a viable business.
“If you want to run a casino, you’ve got to put in place very costly and significant systems, processes and controls,” said White, as reported by The Australian. “There was a manifest failure on the part of Star to do that and that warrants this court imposing a very high penalty, much higher than $100 million.
“An oppressive penalty, we accept, is not appropriate but $400 million is not an oppressive penalty in this case. It’s an appropriate penalty for specific and general deterrence purposes,” he added.
$266 million Suncity loan facility
On Thursday, the court was informed that Star committed “countless” breaches of AML regulations, which involved creating fraudulent relationships with 117 high-risk clients. The firm has acknowledged that 70 of these clients – including junket funders, operators, or players – presented a significant risk for money laundering.
Included in this group was Alvin Chau, head of the Macau-based junket Suncity, to whom the casino extended a credit line reaching AU$266.67 million (US$174 million). This is despite Australian officials raising alarms about Chau's alleged connections to organized crime, particularly the 14K triads, dating back to 2017.
Star permitted Suncity to covertly manage an unbranded VIP room, referred to as “Salon 95,” which persisted after then-Star CEO Matt Bekier informed regulators that his company had cut ties with the junket.
In January 2023, a Macau court sentenced Chau to 18 years in prison for illegal gambling and criminal association.