Austrac denies $400m penalty will bankrupt Star Entertainment

Austrac is pressing for a $400m fine against Star Entertainment for breach of money-laundering laws, denying it could force the collapse of the troubled casino giant.

Austrac seeking big fine against Star for breach of money-laundering laws.

Austrac says a $400m fine against Star Entertainment for breaches of money-laundering laws is justified as it deflected claims it could force the collapse of the troubled casino giant.

The financial crimes watchdog told the Federal Court on Tuesday that the court’s ultimate task was to impose a penalty for general deterrence even if it ultimately meant hurting creditors and employees.

But, Joanne Shepard, counsel for Austrac, told the court there was no evidence the financial penalty would force the company into liquidation given its $300m rescue offer from US-based Bally’s Corp and pubs baron Bruce Mathieson’s Investment Holdings.

Star is seeking a fine of $100m claiming its dire finances, future capital raising ability and insolvency risks should be taken into account.

“Star has just had a white knight come along and agree to inject $300m in cash into its operations,” said Ms Shepard.

“No evidence has been presented that if this court imposes a penalty of a $100 million or more, that this will mean that Starr will go into liquidation.

“Star bore the onus of satisfying Your Honour that a penalty in the amount of $400 million, even payable in instalments, would render Starr insolvent and in my respectful submission Star has not discharged that onus.”

She also denied the fine sought by Austrac would impact negatively on Star’s capacity to raise future capital.

Once both Bally’s and Mr Mathieson gained control of the company later this year after a shareholder vote, they were likely to invest, she added.

“There is a reasonable basis to infer that Bally’s has both the capacity and appetite to invest at least $300 million in Star,” said Ms Shepard.

A general view of the Star Casino in Sydney. Picture: NewsWire/ Gaye Gerard

Steven Finch SC, counsel for Star, said the company’s conduct was serious having regard to the number of contraventions. But Mr Finch said a $400m fine was oppressive and likely would drive the company into insolvency, reducing its deterrence to other players in the casino sector.

“We would be asking for a fine that gives them a chance to survive not a certainty,” Mr Finch said. “The fine Austrac is seeking would be sending a price signal to other players in the field that if you engage in this sort of conduct you are open to being fined every dollar that you have got and every dollar you can borrow.”

Austrac said the penalty it sought against Star took into account its co-operation and admissions in relation to its alleged breaches of anti-money laundering controls. Austrac started proceedings against the company in November 2022 for alleged breaches of anti-money laundering and counter-terrorism financing laws.

Since 2022 the company’s finances have deteriorated to the point where it narrowly avoided appointing administrators earlier this year.

The court case commenced last week.

Simon White SC, counsel for Austrac, said the breaches by Star were arguably worse than that committed by rival Crown Resorts, which was fined $450 million over two years in 2023 for contravening the Anti-Money Laundering and Counter-Terrorism Financing Act.

“There was no finding of deliberateness (of breaches of anti-money laundering controls) in relation to Crown, and we submit deliberateness is a factor weighing heavily in favour of a higher penalty in this case,” said Mr White.

“It is admitted by Star that money laundering and the financing of terrorism exposes the Australian community and financial system to loss or damage that extends beyond the amount of money laundered or used to finance terrorism.”

Mr White told the court earlier that Star had failed to give appropriate consideration to the risks posed by high risk-customers, including Macau-based Alvin Chau who ran the Salon 95 private gaming room inside Star Sydney.

In 2023, Mr Chau was sentenced to 18 years in jail in Macau after being convicted of operating illegal gaming activities, and running a criminal organisation.

The court heard last week that Star issued receipts for “dummy” hotel rooms of up to $250,000 a night as part of a deliberate effort to evade currency flight laws in China and funnel funds into its casinos.

Originally published as Austrac denies $400m penalty will bankrupt Star Entertainment