AUSTRAC Expands Scope of Star Money Laundering Probe

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is Australia’s financial crime regulator. AUSTRAC launched a probe into Star Entertainment’s affairs in June 2021. It is looking for evidence of money laundering in addition to Star’s potential shortcomings in its anti-money laundering processes.

Shares in The Star fell almost three percent in 48 hours following the AUSTRAC announcement it is expanding its probe. Star informed shareholders about the move.

“The Star Entertainment Group Limited refers to its ASX announcement on June 7, 2021, in relation to being notified of AUSTRAC’s enforcement investigation of The Star Sydney.

“The Star has subsequently been advised by AUSTRAC that it has expanded the scope of its investigation to other entities within The Star group.”

“AUSTRAC has advised that it has not made a decision regarding the appropriate regulatory response that it may apply to The Star, including whether or not enforcement action will be taken. AUSTRAC has advised that it will request information and documents from The Star as part of its investigation.”

“The Star takes its anti-money laundering obligations very seriously and will fully cooperate with AUSTRAC in relation to its request for information and documents and the investigation.”

AUSTRAC Investigation Unofficially Rules Out Star’s Crown Resorts Bid

AUSTRAC’s now more thorough investigation into Star means a bid from the casino operator for Crown Resorts is highly unlikely.

Star launched a casino merger bid in May, offering 2.68 shares per Crown share. This valued Crown stock at $14 per share. A deal would have created a $12 billion gambling behemoth, with Crown valued at $8.4 billion.

Star pulled out of the deal in late July rather than going ahead, citing allegations of Crown’s tax evasion. Ironically, Star was not happy with reports of Crown’s lax money-laundering controls.

The recent revised offer from Blackstone Group for Crown Resorts will draw more potential suitors out of the woodwork. Blackstone increased its non-binding offer from $12.50 per share to $13.10 per share. The bid values Crown Resorts at $8.87 billion.

Crown’s board and one of its major shareholders approve of the deal in principle. Perpetual holds a 9.2% stake in the controversial casino giant, making it the third-largest shareholder. It is in favour of the deal if no other bids come in.

James Packer has a 37% stake in Crown and a sale benefits him financially. Packer’s holding is worth $3.3 billion. A Blackstone takeover increases that net worth to $7.83 billion.

What Sparked the Investigation?

A report in Australia’s press sparked the AUSTRAC probe into The Star. Nine’s The Age and Sydney Morning Herald published an article in October. Doing so resulted in Star’s share price plummeting almost 31% in only five days.

“Between 2014 and 2021, Star cultivated high-roller gamblers who are allegedly associated with criminal or foreign-influence operations, according to multiple casino and law-enforcement sources with knowledge of the company’s operations, including Star insiders.”

The newspaper got its hands on paperwork from a KPMG audit in 2018. It found Star disguised hundreds of millions of dollars of withdrawals as hotel expenses. They used special credit and debit cards for the deed. Crown did something similar and the royal commission chastised them.

In addition, files show Mende Trajkoski spent $175 million on Star’s pokies from 2007 and 2021. Trajkoski did this despite not having a job for most of those 14 years. He withdrew $18 million over the past six years. However, police arrested Trajkoski in connection with the importation of three tons of cocaine. Then and only then did his gambling stop.

What Is Money Laundering?

Law enforcement uses money laundering as the term for the “cleaning” of elicit funds. Many illegal activities use cash as payments. Criminals find it difficult to deposit large sums of cash into bank accounts because banks question its origins.

Those criminals often use casinos to clean or launder their ill-gotten gains. They change money for chips or pump money into pokies, withdraw, and get a casino receipt for the money. This make it look like that got lucky, and gives them a reason for being cash-rich.