FinCrime Central - Latest AML/CFT News & Vendor Directory

Star Entertainment’s Struggle with Money Laundering Claims and Financial Crisis

Star Entertainment, one of Australia’s most prominent casino operators, has faced an ongoing crisis that centers on serious money laundering accusations. These allegations, combined with financial mismanagement, have left the company teetering on the edge of bankruptcy. Amid regulatory investigations, hefty fines, and an increasingly damaged reputation, Star is looking for any lifeline that could help it navigate its perilous financial situation. Recently, U.S. casino giant Bally’s Corp. made an offer to inject A$250 million in exchange for just over half of Star’s shares, but whether this will be enough to remedy the company’s deeply rooted issues remains unclear.

For years, Star has been embroiled in controversy, with investigations revealing that the company’s internal systems allowed for substantial amounts of illicit money to flow through its casinos. The company’s repeated failure to address these money laundering concerns has escalated its regulatory issues, leading to penalties, a drop in investor confidence, and executive turnover. As we explore Star’s financial and reputational struggles, we’ll also examine the critical issue of money laundering and how this has played a central role in the company’s decline.

The allegations against Star Entertainment are not new, and they have progressively grown more severe over the years. It all began in late 2021 when the company’s internal review revealed serious lapses in its anti-money laundering (AML) practices. Media outlets reported that Star had allowed illegal financial activities, including money laundering, to take place at its casinos. This report sparked an investigation by Australian regulators, including AUSTRAC (Australian Transaction Reports and Analysis Centre), which focuses on financial crime and compliance with AML laws.

Star’s internal review indicated that the company had failed to implement effective monitoring systems to prevent money laundering, particularly in relation to large amounts of cash being exchanged at its Sydney casino. The review showed that there were inadequate controls over high-risk customers, inadequate reporting mechanisms for suspicious transactions, and, at times, a lack of transparency in transactions made within the casino.

The money laundering allegations were taken seriously by AUSTRAC, which subsequently opened a probe into Star’s operations. This marked the beginning of a series of investigations, inquiries, and legal battles that would continue to plague the company for years. By the end of 2021, it became clear that Star was at risk of not only facing severe fines and penalties but also losing its licenses to operate in various Australian states.

AUSTRAC’s Investigation and the Broader Implications for the Company

In January 2022, AUSTRAC expanded its investigation into Star Entertainment, alleging that the company had breached several key AML laws. AUSTRAC’s probe covered both anti-money laundering and counter-terrorism financing laws, which are critical for ensuring that the financial system is not abused for illegal activities. The financial crime watchdog was concerned about Star’s failure to comply with reporting obligations related to suspicious transactions, as well as its apparent failure to properly verify the identity of high-risk customers.

The allegations were not limited to a few isolated incidents. AUSTRAC’s investigation uncovered a pattern of failures within the company’s internal controls. For example, Star had failed to report a number of suspicious activities, such as large cash deposits made by clients with no clear source of funds. Additionally, the company’s KYC (Know Your Customer) processes were found to be inadequate, as Star allegedly failed to fully understand the sources of wealth of some high-roller clients. This is a serious violation of AML regulations, which require businesses to conduct thorough checks to prevent financial crimes.

The expansion of AUSTRAC’s investigation put additional pressure on the company’s management. In March 2022, Star’s CEO, Matt Bekier, resigned in the wake of the growing regulatory scrutiny. This marked the beginning of a wave of executive departures, further destabilizing the company as it struggled to respond to the mounting legal and financial challenges. The resignation of top executives reflected the depth of the crisis Star faced, with no clear solution in sight.

The Impact of Money Laundering Allegations on Star’s Operations and Reputation

The money laundering allegations had a significant impact on Star’s operations and its ability to maintain a positive public image. As regulators began to take action against the company, Star’s reputation suffered a major blow. Investors began to lose confidence in the company, and stakeholders in its casinos and other ventures started to pull back. This was compounded by the company’s own failure to address the issue effectively, which only deepened concerns among regulators, customers, and the public.

In addition to AUSTRAC’s investigation, the state of New South Wales (NSW) launched its own inquiry into Star’s operations. The NSW inquiry found that Star was unfit to hold a casino license in the state due to its failure to manage money laundering risks properly. The casino license is critical for Star’s continued operations, and losing it would have devastating financial consequences for the company. To make matters worse, Star’s other casinos in Brisbane and the Gold Coast also became the subject of scrutiny as the Queensland government launched an investigation into Star’s money laundering practices in mid-2022.

In September 2022, New South Wales regulators found that Star was unfit to hold a casino license in the state, leading to even greater regulatory pressure. The company’s ongoing struggles with money laundering, combined with its failure to regain the confidence of regulators, left Star vulnerable to penalties and legal challenges. The company’s legal battles and investigations were compounded by severe financial losses, leading to concerns that it might not survive without a significant restructuring.

Fines, Penalties, and Ongoing Legal Battles

The legal and financial fallout from the money laundering accusations continued in the following years. In December 2022, the Queensland government imposed a A$100 million fine on Star for its failure to address money laundering at its casinos. This penalty was only the beginning of what would become a series of fines and penalties imposed by Australian regulators.

The ongoing investigations also triggered leadership instability at Star. In early 2024, after a second inquiry by New South Wales authorities, both the company’s CEO and CFO resigned, leaving Star in a precarious position. The company had lost a significant portion of its executive team, and with them, much of the strategic vision required to guide the company out of its financial and regulatory quagmire.

In response to these challenges, Star appointed Steve McCann, a former CEO of Crown Resorts and property giant Lendlease, in June 2024. McCann was tasked with leading Star through another round of regulatory investigations and improving the company’s governance practices. However, even under McCann’s leadership, the company struggled to regain its footing. In August and September 2024, Star was once again found unfit to hold a casino license in New South Wales, and the company faced fines and additional scrutiny for its ongoing failures in money laundering controls.

Refinancing and Restructuring: Will the Money Laundering Allegations Derail Recovery?

By the beginning of 2025, Star was facing a critical financial crisis, and its available cash had dwindled to just A$78 million by the end of December 2024. The company’s legal troubles had left it with limited options for recovery, and it turned to outside financiers for help. In February 2025, U.S.-based Oaktree Capital offered to refinance A$650 million of Star’s debt, providing a potential lifeline for the embattled company.

However, even as Star considered restructuring its finances, the money laundering allegations continued to hang over the company. The failure to adequately address the money laundering issue had already cost the company dearly in terms of fines, legal fees, and lost business. As the company moved toward a potential bailout deal, regulators and investors remained highly skeptical of Star’s ability to turn things around. With ongoing investigations and concerns about its compliance with AML regulations, Star’s future remains uncertain.

A Potential Lifeline from Bally’s Corp

In March 2025, Star received a proposal from U.S.-based Bally’s Corp. to inject A$250 million into the company. This deal would help Star raise capital through a capital raise and the issuance of convertible notes to existing senior lenders. The offer was seen as a potential lifeline for the company, but it remains to be seen whether this deal will be enough to resolve Star’s ongoing financial and regulatory issues.

Despite the influx of potential funds, the company’s ongoing struggles with money laundering are far from resolved. Until Star can demonstrate a substantial improvement in its AML compliance, its future will remain in jeopardy.

Conclusion: Can Star Overcome the Money Laundering Crisis?

Star Entertainment’s battle against money laundering accusations has been a defining factor in its financial and operational struggles. From the internal review revealing lapses in its AML controls to the ongoing investigations and regulatory scrutiny, money laundering has played a central role in the company’s downfall. As Star navigates through its current financial crisis, the key to its survival lies in its ability to regain trust with regulators, improve its governance and compliance practices, and demonstrate that it can prevent future money laundering activities at its casinos. Only time will tell if the company can weather this storm and emerge stronger from its battle with money laundering.