Star hides Chinese ‘swindler’ and loan shark links from internal anti-money laundering monitoring

Star Entertainment deliberately omitted links between China’s underworld and one of its biggest junket operators in its internal anti-money laundering system.

Greg Hawkins says he is unclear why the group ‘discounted’ one of its biggest junket operators links to China’s underworld. Picture: Stephen Cooper

Star Entertainment deliberately omitted links between China’s underworld and one of its biggest junket operators in its internal anti-money laundering system, potentially creating a ‘‘false audit trail’’, an inquiry has heard.

Star commissioned a report from an external due diligence provider, which found the main source of wealth of its second-biggest junket operator, Sixin Qin, included loan sharking and operating illegal casinos.

But it “discounted” this information in its internal monitoring system, Trackvia, and Star’s anti-money laundering compliance officer continued to allow Mr Qin into the casinos.

It even granted Mr Qin a $50m credit line via a cheque-cashing facility – second only to the $70m granted to Suncity’s since-arrested operator Alvin Chau.

On the third day of evidence from NSW chief casino officer, Greg Hawkins, the royal commission-style inquiry heard of a “significant breakdown in Star’s controls”, while the group was accused of prioritising business goals over compliance.

It comes after the inquiry heard that Star continued to deal with Suncity, despite senior executive receiving in mid-2019 a report its due diligence manager Angus Buchanan wrote while working at the Hong Kong Jockey club, which exposed Mr Chau’s links to Chinese criminal gangs.

In January 2020, a separate external due diligence report commissioned by Star stated that Mr Qin “was a swindler in Shanghai”. “He is very cautious by nature and very apprehensive that his previous Shanghai identity would be exposed to allow his Shanghai creditors to locate him. Therefore, he does not trust anyone, even his driver, although hand-picked,” it read.

The report stated that while Qin appeared to be a bona fide businessman, he ran illegal online gambling and bookmaking syndicates, and while he was not known to be a Triad member he “cannot avoid” being associated with the Chinese gangs. But that report was omitted from Trackvia, despite the AFP informing Star’s financial crimes boss Kevin Houlihan that Mr Qin and two others Chinese gamblers were of interest, “not due to any current investigations, but more as an intelligence gathering due to their associations internationally”.

Asked why those details were not included in Trackvia, Mr Hawkins highlighted a sentence referencing “uncorroborated information” but no further details.

Counsel assisting the inquiry Naomi Sharp SC said “it doesn’t provide a very accurate audit trail”. “Assume that this printout is given to a regulator to show what the diligence consideration has been given to a patron at a particular point in time, you’d agree wouldn’t you that it does not disclose very relevant information that was available to Star about the propriety of that patron at this point in time?”

Mr Hawkins said he was “unclear” why it was discounted.

Ms Sharp said: “Isn’t the appropriate cause one that involves stating the information and clearly explaining why it was discounted?” Mr Hawkins replied: “That could present a more thorough assessment of the information.”

In his witness statement to the inquiry, Mr Hawkins said he believed Mr Qin was “not a suitable person for the Star Entertainment Group to deal with”. But he said he was not sure whether Mr Qin had been banned from the casino.

His evidence followed the inquiry hearing that Mr Chau was yet to be formally banned.

The inquiry also heard on Thursday that Mr Hawkins did not consider the appropriateness of the casino’s group practice of disguising gambling transactions as hotel charges to skirt a Chinese ban, because it was something adopted across the gaming sector.

Crown Resorts is facing a fine of up to $100m from the Victorian regulator for engaging in similar illegal Chinese debit card transactions. Gambling in China is illegal and China Union Pay cards can’t be used for that process.

The cards can also be used to dodge Chinese capital controls or, as Ms Sharp said “allow Star being used as one big fat ATM machine”.

Mr Hawkins also said: “I did not turn my mind to whether CUP generally gave rise to a money laundering risk”.

Ms Sharp asked if that was an “extraordinary lapse of judgment”.

“I was relying on other established areas within the group. Within the context to the responsibilities I have, perhaps I could have done more but I don’t think it’s unreasonable to rely on established other entities within the organisation to provide me with guidance.”

The biggest user of CUP cards at Star, Phillip Dong Fang Lee – who withdrew $70m on his CUP cards at the Star in 2015 and 2016, despite his gambling not matching that amount – told the inquiry last month that he could use his card at the group’s Pyrmont casino gaming tables. He said he gave his card to a Star employee to swipe on his behalf.

“It would be a contravention and what was established at the time,” Mr Hawkins said on Thursday.

Inquiry head Adam Bell SC said “and it would be a significant breakdown in the Star’s controls?” Mr Hawkins agreed.

Mr Bell also asked if the reason Mr Hawkins did not shut down Suncity’s exclusive gaming salon – despite junket flouting NSW laws- was because “business goals took priority over compliance goals”.

“That junket’s contribution, in the scheme of things, is far smaller than our local business is. I think it was just a matter of wanting to maintain the relationship and trying to get the area rectified to a compliant state as quickly as possible,” Mr Hawkins said.

The inquiry continues.