Star investigated by AUSTRAC for potential law breaches

By Ethan Anderson Updated
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Star Entertainment Group is being investigated by Australia’s financial crimes watchdog over suspected breaches of customer due diligence laws.

Gambling Insider reports that the investigation could jeopardise the casino operators’ $12 billion proposal to buy rival Crown Resorts.

A statement released by Star revealed that AUSTRAC had identified several potential non-compliance cases with the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007.

The concerns include “ongoing customer due diligence, adopting and maintaining an AML/CTF Program and compliance with Part of that Program” and were initially addressed by AUSTRAC in 2019, when the regulator focused on Star Sydney’s management of high-risk and politically exposed clients from 2015 to 2019.

AUSTRAC will conduct further investigation and the Star stated it “will fully cooperate with AUSTRAC in relation to its requests for information and documents and the investigation”.

The Star recently submitted a proposal to acquire Crown Resorts, another operator that is itself going through several investigations and royal commission inquiries into its casino operations.

The initial report that alleged Crown’s involvement in money laundering kickstarted a series of probes to determine whether the organisation is suitable to hold gaming licences.

Now AUSTRAC has widened its Crown investigation and started a formal enforcement probe into a potential breach of anti-money laundering and counter-terrorism financing rules in Crown’s Perth casino.

The regulator is also looking into SkyCity Entertainment Group, which has a casino in Australia, suspecting the same breaches in anti-money laundering and counter-terrorism rules.

Star flags interest in Crown takeover with $12m offer

In May, Star Entertainment Group submitted a merger proposal to its main rival, Crown Resorts.

The non-binding proposal offers 2.68 The Star shares per Crown share, which The Star says values Crown shares above $14.

Crown shareholders would also be offered the alternative of $12.50 cash per share, up to a limit of 25 per cent of its shares.

The merger proposal trumps a bid by US private equity firm Blackstone, which was raised over the weekend from $11.85 to $12.35.

The new cash offer puts an $8.4 billion value on Crown.

Both offers are higher than the share price has been since mid-January 2020.

The price crashed last March as the pandemic took hold, and as hearings for the Bergin inquiry into Crown Resort’s fitness to hold a casino licence for its new Barangaroo casino on Sydney Harbour confirmed media reports about links to criminal gangs and rampant money laundering.

The Star’s chairman, John O’Neill, said the merger would create a $12 billion casino and entertainment company listed on the ASX.

“A merger of The Star and Crown would result in significant scale and diversification and unlock an estimated $2 billion in net value from synergies,” he said in a statement to shareholders.

“With a portfolio of world-class properties across four states in Australia’s most attractive and populated catchment areas and tourism hubs, the combined group would be a compelling investment proposition and one of the largest and most attractive integrated resort operators in the Asia-Pacific region.”

The Star is also pitching its offer as a way to potentially solve Crown’s regulatory woes, which continue to stop its new casino in Sydney harbourside Barangaroo district from commencing gaming operations, due to governance problems and money laundering risks.

Crown’s biggest shareholder, James Packer, is keen to exit the business, which may also assist the company in gaining NSW regulatory approvals.

However, Crown now also faces royal commissions investigating its past practices and compliance with gaming and money laundering laws in Victoria and Western Australia.

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