A comprehensive report prepared by Adam Bell SC has exposed a series of alarming anti-money laundering (AML) and social responsibility shortcomings at The Star Sydney. The report highlights ineffective risk management, governance failures, and a dysfunctional culture that prioritized business goals over compliance objectives.
The operator’s misconduct includes deceptive practices to circumvent Chinese capital flight laws, involvement with entities linked to organized crime, and attempts to conceal information from regulatory authorities. The NSW Independent Casino Commission (NICC) has assumed responsibility for disciplinary actions against The Star, following recent reforms that have strengthened regulatory oversight.
Compliance Breakdown and Culture of Unethical Conduct:
Adam Bell SC’s report unveils a disturbing pattern of non-compliance and ethical misconduct within The Star Sydney. The operator’s institutional failings are attributed to ineffective risk management, governance deficiencies, and a culture that condoned unethical behavior while prioritizing business objectives over compliance requirements. The report points out various instances of misconduct, including deceptive reclassification of gambling spend as hotel expenses on China Union Pay (CUP) cards to bypass Chinese capital flight laws, providing false information to banking institutions, allowing entities with suspected organized crime links to operate within the casino, and concealing documents from the Independent Liquor and Gaming Authority (ILGA), the state regulator.
Empowered NSW Independent Casino Commission (NICC):
The NICC, a newly established statutory authority, has been entrusted with the responsibility of overseeing disciplinary actions against The Star Sydney. The NICC assumed regulatory control of the casino trade from the ILGA. Phillip Crawford, the chief commissioner of NICC and chair of ILGA, expressed shock at the findings and emphasized the extensive compliance breakdown within The Star’s operations. He mentioned the disguise of significant amounts of money as hotel expenses, substantial cash flows evading anti-money laundering protocols, and the existence of a secret room with a second cash cage called Salon 95. The NICC is currently assessing the report’s content and will determine an appropriate disciplinary approach after allowing The Star to respond to the allegations.
Enforcement Actions and Show Cause Notice:
Accompanying the report, the NICC issued a “show cause” notice to The Star, requiring the operator to explain itself in response to the outlined offenses. The casino has a 14-day period to respond before facing disciplinary action. While the specific nature of the enforcement actions remains uncertain, it is expected that some form of penalties will be imposed. According to the 1992 Casino Control Act, potential consequences for The Star may include censure, fines up to AU$100 million, and suspension or cancellation of the casino license. The notice states that, based on the report’s findings, The Star is deemed unsuitable to be associated with the management and operation of a casino in New South Wales.
Reforms and Regulatory Empowerment:
The release of the Bell report coincided with recent reforms aimed at enhancing regulatory oversight and enforcement capabilities. The NSW Government has provided the NICC with expanded authority to address the findings of the report. The available disciplinary options for the NICC include license revocation, suspension, monetary penalties, and the appointment of a manager to oversee operations. These reforms underscore the government’s commitment to ensuring the integrity of the casino industry and upholding the highest standards of compliance.
The damning report prepared by Adam Bell SC exposes significant compliance failures and a culture of unethical conduct at The Star Sydney. The findings highlight inadequate risk management, governance deficiencies, and a culture that prioritized business objectives over compliance obligations. The NICC now assumes the responsibility of determining disciplinary actions, which could range from fines to the revocation of The Star’s casino license. The release of the report and the subsequent enforcement actions reinforce the need for stringent AML measures and regulatory oversight within the gambling industry. It is imperative that The Star and other operators promptly address the identified issues to restore trust and uphold regulatory integrity.