AUSTRAC files court proceedings against The Star and its entities

The Australian government financial agency in charge of monitoring transactions to help identify tax crimes, money laundering and terrorism financing, Australian Transaction Reports and Analysis Centre (AUSTRAC), announced Wednesday it filed civil penalty proceedings against The Star and its entities in the country.

The Federal Court proceedings come after AUSTRAC launched a probe into the Star's compliance back in September 2019. Consequently, the financial regulatory authority launched an enforcement investigation into The Star last year in June. After that, in January, AUSTRAC's probe was expanded and included The Star's entities.

During the investigation, AUSTRAC collaborated with ASIC, the gambling regulator in Queensland and NSW, among other federal agencies. In the end, the civil penalty was launched, alleging that The Star and its entities did not comply with the existing anti-money laundering (AML) and counter-terrorism financing (CTF) regulations active in Australia. Moreover, AUSTRAC claimed that those breaches were systematic.

The allegations against The Star and its entities include deficiencies in determining the risks of money laundering and terrorism financing and failure to identify such risks. Additionally, the legal challenge alleges that the company and its subsidiaries did not "include in their AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks," a statement released on November 30, 2022, by AUSTRAC explains.

AUSTRAC alleged that the company and its entities did not set an "appropriate framework for Board and senior management oversight of the AML/CTF programs." The financial agency's allegations include insufficient due diligence programs and monitoring mechanisms, among other deficiencies.

According to AUSTRAC's civil proceedings, the missing money laundering and terrorism financing oversight allowed customers to use its entities to move money without assessing the related risks. The financial agency added that the company's entities were not aware of "the sources of money moving through these channels or whether there was a risk that the source of funds was illicit."

Considering that sufficient AML and CTF efforts were not implemented, AUSTRAC said that the company's entities were not protected from potential exploits by criminal organizations. Furthermore, the financial agency claimed that The Star's actions have also created a risk for the Australian and global financial system for multiple years.

Nicole Rose, AUSTRAC's CEO, said on the topic: "Criminals will always seek to exploit the financial system to launder their money and harm the community." She explained that businesses have the obligation to defend the financial system in the country and at the same time flag any potential criminal activity.

"AUSTRAC's investigation identified a multitude of issues including poor governance and failures of risk management and to have and maintain a compliant AML/CTF program," added Rose.

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