The Federal Court of Australia has ordered Star Entertainment Group to pay AU$260 million in penalties for breaching anti-money laundering and counter-terrorism financing (AML/CTF) laws, in a civil case brought by the financial crime regulator AUSTRAC.
Justice Cameron Moore handed down the judgment. According to the report, the case was launched by AUSTRAC in 2022, following an investigation into Star's operations that began in June 2021 and was expanded to Queensland in January 2022.
"In effect, Star put profit over compliance and did so on a large scale." — Justice Cameron Moore
How the penalty is divided
The penalties comprise AU$195 million for The Star Sydney and AU$65 million for The Star Gold Coast. Justice Moore accepted that the Sydney property should carry three times the Gold Coast amount because of the gravity of its contraventions.
The judge rejected both sides' proposals. Star had proposed a penalty of AU$100 million, while AUSTRAC had proposed AU$400 million. He also refused to compare Star's conduct with Crown Resorts' AU$450 million AUSTRAC settlement in 2023.
The report says Justice Moore took several factors into account that reduced the penalty from what it otherwise would have been: Star's remediation efforts, earlier state penalties and the licence suspension at The Star Sydney. The source does not give further detail on those earlier penalties or the suspension.
What AUSTRAC alleged
According to the report, AUSTRAC alleged that Star failed to assess money laundering and terrorism financing risks. It also alleged that Star maintained inadequate AML/CTF programs and board oversight, and permitted customers to move money through payment channels that were non-transparent and involved high risks.
The source material does not set out the individual contraventions or say which findings the court made on each allegation. Beyond the judge's remark quoted above, it also does not describe his reasoning in detail.
Payment terms and Star's finances
Justice Moore said Star would likely need to raise money to pay. He set four equal instalments over 19 months rather than require the full amount at once, as AUSTRAC had proposed. On the figures reported, equal instalments would be AU$65 million each, though the source does not state that amount or the payment dates.
The penalty falls on a company still working through a rescue. The report says that last year an AU$300 million package led by chairman Soo Kim and Bruce Mathieson Jnr saved Star from financial collapse. Control passed to Kim's Bally's, while the Mathieson family pub empire took a significant stake after contributing AU$100 million.
Star's annual report in August told investors that a penalty above AU$100 million would be challenging given available liquidity options, according to the report. The company has also acknowledged that the fine might pose an existential threat. Its shares went into a trading halt before the judgment, pending an announcement on the judgment and its effect on the company.
What is not yet known
The source does not say what Star's announcement said, how the company plans to fund the instalments, or whether either party intends to appeal. It also does not say whether the judgment carries any further consequences for Star's licences beyond the penalties. Those points remain undisclosed in the material available.
The case concerns Star's land-based casino operations in Sydney and on the Gold Coast. Online casino services are prohibited in Australia under the Interactive Gambling Act 2001.