The Australian Transaction Reports and Analysis Centre (Austrac) has revealed the results of its investigations into anti-money laundering (AML) and counter-terrorism financing non-compliance in the country. The probe, initiated in June of the previous year, focused on The Star, a prominent land-based casino operator, as well as other industry players such as Crown Resorts and SkyCity Entertainment Group. Austrac found “serious and systemic” breaches of the Australian AML/CTF Act and Rules. The investigation, originally centered on financial irregularities at The Star’s Sydney casino resort, was later expanded to assess other entities within the group. Austrac’s actions underscore the importance of businesses as the frontline defense against criminal activities within the financial system.
Failure in Governance and Risk Management:
Austrac’s investigation uncovered numerous shortcomings within The Star and its entities. These included poor governance, inadequate risk management practices, and a failure to establish and maintain a compliant AML/CTF program. The organization also noted the absence of appropriate risk assessments, failure to implement risk-based systems and controls, and the lack of a comprehensive framework for board and senior management oversight. Furthermore, The Star was found to lack a transaction monitoring program to identify suspicious activity and did not have a robust customer due diligence program, particularly for high-risk customers. Austrac’s findings also highlighted the use of non-transparent payment channels with high money laundering and terrorism financing risks.
Impact on the Financial System and the Community:
As a result of these deficiencies, Austrac concluded that The Star was vulnerable to criminal exploitation, posing systemic risks to both the Australian and global financial systems. The organization stressed the significance of businesses in safeguarding the community and preventing criminal activities. Austrac Chief Executive Nicole Rose emphasized that criminals will always seek to exploit the financial system, making it crucial for businesses to be alert to potential illicit activities.
Civil Penalty and The Star’s Response:
While Austrac did not confirm whether The Star would face a civil penalty, it stated that this would be determined by the court. In response to Austrac’s announcement, The Star expressed its commitment to addressing its AML obligations and acknowledged the need for significant improvements. The operator emphasized its determination to regain the trust and confidence of Austrac and other regulators, focusing on transforming its culture and business practices.
Challenging Year for The Star:
Austrac’s actions come at the end of a challenging year for The Star. The operator faced investigations and unfavorable findings, including being deemed unsuitable to hold a license in New South Wales, resulting in a substantial penalty and indefinite license suspension. The company also encountered regulatory issues in Queensland and faced a securities class action lawsuit in Victoria. These developments highlight the operator’s need for substantial improvements across various aspects of its operations.
Austrac’s Actions in the Sports Betting Sector:
In addition to its investigations into The Star, Austrac has also scrutinized businesses within the Australian sports betting sector. The body launched a money laundering investigation into Entain, the operator of the Neds and Ladbrokes brands. Furthermore, Austrac recently ordered audits of Bet365 and SportsBet, both owned by Flutter, to assess potential breaches of money laundering rules.
Austrac’s extensive investigation into The Star and other land-based casino operators reveals significant non-compliance with AML and counter-terrorism financing regulations. The findings emphasize the importance of robust governance, risk management practices, and effective AML/CTF programs in protecting the financial system and the community from criminal exploitation. The Star’s commitment to improvement and rebuilding trust reflects the seriousness of the situation and the operator’s determination to rectify the identified deficiencies. Austrac’s actions in the sports betting sector further demonstrate its proactive approach to combatting money laundering across various segments of the Australian gambling industry. Moving forward, strict enforcement and compliance measures will be crucial to fostering a more secure and regulated gambling landscape in the country.