Star Entertainment Faces Risk of Collapse Over AUSTRAC’s $400M AML Fine

Star Entertainment faces a potential collapse under a $400 million penalty proposed by the Australian Transaction Reports and Analysis Center (AUSTRAC). The Federal Court is probing the operator’s systemic anti-money laundering failures and criminal junket affiliations.

Proceedings began on June 4^th and quickly shifted behind closed doors for confidential testimony from Star CFO Frank Krile, recruited from Lendlease last December. Star and AUSTRAC jointly mandated privacy to shield sensitive financial disclosures that risk destabilizing the group’s lender negotiations and fragile share price. Krile faced intense questioning about Star’s fiscal resilience and capacity to withstand the historic fine.

Suncity Criminal Ties

Star’s deep collaboration with Macau-based junket operator Suncity, a group with established criminal ties, anchors the prosecution’s case. AUSTRAC disclosed that Suncity processed over $70 million weekly at Star Syndey between 2016 and 2020, funneling $11.8 billion through the Sydney property and an additional $2.9 billion through its Queensland casinos.

Adding to the alarming allegations, Star continued transacting with Suncity’s former chairman, Alvin Chau, until his 2021 Macau arrest. The relationship continued despite internal alerts in 2019 and external reports exposing Suncity’s links to Chinese organized crime and money laundering.

Defending the penalty’s severity, AUSTRAC counsel Simon White SC declared, “$400 million is not an oppressive penalty. In this case, it’s an appropriate penalty.” He characterized Star’s compliance breakdowns as “manifest.”

High Risk Operations

AUSTRAC alleges Star enabled 117 high-risk clients to funnel billions in illicit funds through its Syndey, Brisbane, and Gold Coast casinos from 2016 to 2020. White revealed Star granted a $266.7 million cheque facility to a customer tied to foreign crime syndicates, who also wired $250,000 to a non-gambler.

Suncity operated exclusively in Salon 95’s high-roller room with a private service desk, bypassing Star’s oversight. Transactions involved cash transported in suitcases, backpacks, and cooler boxes. According to Star’s then-general counsel Oliver White, Star employees repackaged the funds, used blankets to evade CCTV, and distributed cash to non-gamblers. White opposed the off-books desk in March 2018, but management pressured him to reconsider, allowing the operation to continue.

Plea for Reduced Penalty

Star acknowledges AUSTRAC’s claims and seeks a reduced $100 million penalty to avoid liquidation, arguing the amount is as much as it can afford. Barrister Emma Bathurst emphasized, “This lending information is critical to the just and proper determination of these proceedings, particularly given the prominence of the question of Star’s capacity to pay.”

The operator disclosed a $300 million loss for the last six months of 2024, prompting a $300 million April rescue package from Bally Corporation and $100 million from the Mathieson family to prevent collapse.