Star Sued Over Money Laundering: An Interview with First AML’s Milan Cooper

Australian government financial intelligence agency AUSTRAC last week announced that its launched proceedings against Sydney Star Casino and Star Entertainment Queensland (Star Entities) in relation to “alleged serious and systemic noncompliance” with money laundering protections.

The federal agency claims that Star Entities has not been following the provisions in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), which contains measures “to detect, deter and disrupt money laundering, the financing of terrorism and other serious financial crimes”.

The civil case was lodged, following AUSTRAC having launched an industrywide compliance campaign in 2019, which eventually led it to open an enforcement investigation into Sydney Star in June last year, which was then broadened to take in Queensland in January.

AUSTRAC alleges that Star Entities has breached section 81 of the AML/CTF Act “on an innumerable number of occasions”, as well as having committed over 1,000 further breaches of other provisions, which has led to a situation where the financial penalties it’s facing are unlimited.

Macau down under

While the Department of Home Affairs likes to assert that our nation “has a strong regime to fight money laundering and terrorism financing”, the reality is that Australia has been gaining a reputation as being a global money laundering hub, just like Macau.

Indeed, the Senate launched a committee inquiry into the inadequacy of Australian AML/CTF laws last year, and it reported back in March. The inquiry found that as Australia has not adopted recommended reforms, this country is becoming increasingly attractive to overseas players.

A key reason for Australia’s growing international reputation in this regard is that the nation has not adopted tranche 2 anti-money laundering measures, the inquiry determined, which would see AML/CTF requirements extended to accountants, the legal profession and real estate agents.

The chief recommendation made was that Australia legislate these tranche 2 laws. Although there are those in the legal sector, including Law Council of Australia president Dr Jacoba Brasch KC, who consider that the risk of money laundering in regard to law firms doesn’t warrant such requirements.

AML crackdown

Star Entities is not the only casino operator that AUSTRAC has had its sights set on. The agency already has a case progressing against Crown casinos in Melbourne and Perth, while on Wednesday this week, it launched further noncompliance action against Adelaide’s SkyCity casino.

According to First AML CEO Milan Cooper, the reason the federal agency is cracking down on these gambling entities is due to mounting international pressure. And Cooper ought to know, as his company specialises in AML systems to help businesses comply with such laws.

Sydney Criminal Lawyers spoke to First AML’s Milan Cooper about our nation’s rising reputation as a global money laundering hotspot, the harms that this criminal activity is associated with, and how he considers Star Entities is going to fare in its pending court battle.

AUSTRAC has filed a civil case against Star Entities alleging that it has engaged in serious and systemic noncompliance with Australia’s anti-money laundering and counterterrorism financing (AML/CTF) laws.

Milan, in your understanding, what sort of on the ground behaviours does the AUSTRAC claim cover?

Star has failed to establish a culture of compliance, which must start at the top of their organisation with the board and senior management.

What AUSTRAC’s claim covers is there’s been a lack of transaction monitoring to identify suspicious activity amongst their customer base, and ultimately, they haven’t been carrying out the right level of due diligence on high-risk customers.

In terms of how they assert that money laundering has been taking place, what they’re saying is that high risk customers have been allowed through the casino and they haven’t been properly conducting what are called source of funds checks to make sure that the funds are clean.

They’ve had no real focus on understanding their customers and making sure they are above board. So, that’s the crux of it.

AUSTRAC has listed a number of circumstances in which it considers Star Entities has failed to comply with federal laws. So, what does it mean when businesses, like casinos, aren’t actively ensuring that the money being funnelled through their systems has a legitimate source?

It appears that there has been a systematic problem here, starting right from the top of the organisation and almost a culture of noncompliance.

It implies that Star, in this case, has been more focused on profits, rather than on genuinely following an AML compliance program and attempting to combat money laundering.

This development comes after the NSW Bell inquiry report outlined in August that the Sydney Star had facilitated money laundering and ignored warnings about links to criminals.

This resulted in Star being fined $100 million in October and having its licence suspended.

AUSTRAC has launched its current case against Star on the back of similar ongoing proceedings it has against the Crown casinos.

Why are these obviously long-term laxed approaches to money laundering activities coming home to roost now?

What we are seeing is AUSTRAC take it up a notch in their level of supervision and their enforcement of the AML laws.

It’s also due to increasing pressure or scrutiny on AUSTRAC itself, as it needs to be seen to be taking action in this space. It can’t just sit back and watch this happen.

It is the mounting pressure that Australian regulators and the government are under to bring Australia’s AML laws up to the same levels as the rest of the world and then ensure that they’re being enforced.

Your company, First AML, deals with the prevention of money laundering activity. When measures are taken against entities, like the Star and Crown, there’s a lot of talk about how money laundering harms the community.

What negative impact does money laundering result in? How does it harm the broader community?

It’s really shocking when you dig into what crimes are enabled by money laundering, because they’re the most abhorrent crimes you can imagine, like human trafficking, sex exploitation, the drug trade and other illegal activities. These are all enabled by money laundering.

Just take modern slavery, for example, there are an estimated 40 million people in the world under a form of modern slavery and that’s creating billions and billions in illegal profits for the criminals running these rings.

The most terrible things within humanity are being facilitated or enabled by money laundering.

In response to the AUSTRAC proceedings against Star, you’ve asserted that the case is indicative of a broader culture of money laundering that’s set in across Australia and is leading this nation to fast becoming one of the capitals of such criminal behaviour globally.

Can you expand on why this criminal behaviour is becoming more rampant in Australia, and how that translates in terms of international players?

AUSTRAC themselves have estimated $200 billion is laundered in the Australian financial system annually.

That’s a huge amount of money, and Australia’s international peers are really starting to take notice of the effect.

For example, the Bureau of International Narcotics and Law Enforcement Affairs in the US has now put Australia on a list of countries of concern, due to the laxed approach to AML laws.

So, what we’re seeing is a lot of Australia’s peers on the world stage, who have adopted far more rigorous AML laws, are starting to ask the question, why hasn’t Australia?

Further evidence of this is Australia’s lack of adoption of the so-called tranche 2 legislation, which would bring designated nonfinancial businesses under the AML regime, such as lawyers, accountants and real estate agents.

It’s certain that Australia is lagging behind its peers, and these international players are asking questions.

And lastly, Milan, AUSTRAC outlines that the breaches of anti-money laundering laws are so numerous in the case of Star Entities that the civil penalties it’s facing are unlimited.

With the Sydney Star Casino already under serious scrutiny on the state front, how do you consider Star Entities is going to fare in terms of the much broader case the federal intelligence agency has filed against it?

The NSW Independent Casino Commission (NICC) posits that Star Entertainment continuously employed “inherently deceptive and unethical processes” and “brazen and deliberate misdirection” to skirt AML laws.

The broader federal case points to this behaviour being systemic in the Star Entertainment Group’s business strategy, and it’s condoned across the business at all levels.

Because of this, I expect Star Entities will fare badly given that these two investigations have independently shown a distinct disregard for AML/CTF law, and the impact dirty money can have on the economy at large.