Star casinos are facing massive fines, with the anti-money-laundering regulator AUSTRAC launching a Federal Court action seeking civil penalties.
AUSTRAC alleges Star failed to implement legally required monitoring of money-laundering risks.
It is arguing the breaches were "serious and systemic" and that, in the absence of these risk-based controls, the Star entities were vulnerable to criminal exploitation.
The regulator's statement of claim, which runs to more than 2,000 pages, alleges The Star did not take seriously enough the laws around anti-money laundering and terrorism financing (AML/TF), in "the face of known and serious ML/TF risks".
AUSTRAC alleges the board and senior management failed to build appropriate "capabilities and failed to invest in appropriate automated solutions".
In addition, the company took money through "high-risk channels that were not subject to appropriate risk-based controls", such as junkets, where someone who was not a staff member would bring a group of gamblers from overseas.
This meant that the casino ended up serving punters who should have been asked a key question: Where is the money coming from?
"In the absence of appropriate controls, Star Sydney and Star Qld provided designated services to high-risk customers in circumstances where concerns should have been raised as to the legitimacy of their source of wealth or source of funds," the statement of claim argued.
"These failures allowed high-risk customers to move money in non-transparent ways, with minimal due diligence on ML/TF risks.
"These failures exposed Star Sydney and Star Qld to the risk of being exploited by organised crime."
Virtually limitless fines
There is virtually no limit to the potential maximum fine.
Court filings note that contraventions of the law can attract fines of between $18 million and $22 million per breach.
There are 1,189 alleged contraventions of one law, 325 of another — just that could add up to a potential maximum fine in the billions of dollars.
But it could be more. Star Sydney and Star Qld "have each contravened s81 of the Act on an innumerable number of occasions on and from 30 November 2016", meaning the maximum penalty is virtually infinite.
AUSTRAC has a history of extracting huge fines from institutions, including the Commonwealth Bank ($700 million) and Westpac ($1.3 billion) over breaches of money-laundering controls.
However, those fines were much smaller than the theoretical maximum, which was well above the total value of the companies in both cases.
In March, it took similar action in the Federal Court against Crown Melbourne and Crown Perth, a case that is still ongoing.
The Star's managing director and chief executive, Robbie Cooke, acknowledged the proceedings and said the group was "transforming our culture, transforming our business".
