Following revelations of alleged failure to combat money laundering and terrorist financing risks, Australia’s second-largest casino, Star Entertainment Group, is currently facing the threat of a class-action lawsuit.

The Backdrop

Historically, casinos have been at risk of exploitation by those seeking to launder the origins of criminally derived funds.

In response, casinos – amongst many other Reporting Entities, are subject to various AML/CTF obligations, that serve to combat these risks.

The Revelations

Ultimately, it has been Star’s alleged inability to comply with these obligations that have led to this lawsuit.

At the centre of the revelations is a 2018 report, prepared by KPMG.

This report highly criticised Star’s internal systems, and revealed deficiencies in the company’s ability to manage their AML risks – noting factors such as “inadequate resourcing to operate the AML/CTF programme”, “no documented money-laundering risk assessment”, and insufficient consideration of terrorism financing.

They were also accused of putting profits before compliance, by failing to properly vet hundreds of high rollers, some of whom were high-level criminals.

As a result, Star’s share price has plunged – dropping by over 20% in a single day, and reportedly wiping nearly $1 billion off their market value.

The Next Steps

Maurice Blackburn Lawyers – the law firm leading the lawsuit are now calling for anyone who purchased Star shares between October 2015 – October 2021 to come forward, to enable an investigation into whether shareholders have suffered losses as a consequence of materially incorrect information.

There is also expected to be a cross-examination of Star’s executives, including CEO Matt Bekier, to find out how much they knew about the company’s alleged AML failings.

Australia’s financial crimes unit, AUSTRAC, will also probe the company, with severe financial penalties anticipated once the investigation is complete.

Star’s Response

To date, Star has described the allegations as “misleading”.

They have also claimed that they have taken significant action in response to the 2018 report, including adopting all recommendations and working with AUSTRAC to ensure they were satisfying obligations.

Looking Ahead

We look forward to keeping up to date as new findings emerge from the investigation.

Overall, these happenings serve as a stark reminder to all Reporting Entities of just how important upholding AML/CTF obligations are.

We Can Help

If you would like to work alongside a team of specialists to ensure you’re adequately meeting your requirements, get in touch with us. Our professional team is here and ready to help.