The Star board’s lack of information about an unacceptable change in the company’s relationship with an overseas money remitter was the result of failures by senior management, a lawyer trying to save the company’s Sydney casino licence says.
The NSW Independent Liquor & Gaming Authority is conducting an inquiry into whether the embattled company should keep its licence.
After months of hearings examining claims the casino enabled suspected money laundering, organised crime, fraud and foreign interference, Kate Richardson SC is closing Star’s case.
She has told the inquiry the company was probably not fit to hold a casino licence in the past but is now suitable after the departure of senior staff and reforms to its processes.
Ms Richardson resumed her closing submissions on Thursday, focusing on the relationship between Star and an overseas third-party money remitter named Kuan Koi.
The inquiry has heard Mr Koi facilitated the passage of funds between international patrons and the casino operator’s bank accounts.
The process originally began in 2018 as an “interim arrangement” sparked by a Chinese government crackdown on money leaving the mainland for gambling, Ms Richardson told the inquiry.
The arrangement was originally intended to run until Star subsidiary EEIS could begin providing and collecting loans from overseas patrons.
Money would be collected overseas and go through Mr Koi’s bank accounts before reaching Star.
Star accepted the arrangement lacked transparency, because banks and law enforcement would see money coming to the casino from Mr Koi, and not from the patron.
It would be open to the review to conclude the arrangement was unsatisfactory in regards to anti-money laundering and counter-terrorism financing (AML-CTF) laws, Ms Richardson submitted.
A 2019 memorandum from Star general counsel Oliver White warned the board that the company had not been able to verify whether the methods used complied with the law.
Star’s compliance with the law became even murkier when the arrangement morphed over time.
“The board wasn’t briefed at all about the modified Kuan Koi arrangement,” Ms Richardson said.
Under the modified arrangement, Mr Koi could also facilitate the deposit of “front money” for overseas patrons travelling to Australia to gamble.
This changed the risk because Star would no longer be conducting due diligence on the patron and their source of funds, Ms Richardson said.
Mr Koi was effectively acting as a remitter despite being unlicensed, Ms Richardson submitted, and Star made an error of judgment.
“(Star) accepts that the more prudent course would have been not to pursue the Kuan Koi arrangement at all,” Ms Richardson submitted.
Star also relied on overseas remitters to comply with the AML-CTF laws in their own jurisdiction, which did not always happen.
“A reasonable expectation of conduct by others may be relevant but the Star may not outsource its responsibilities,” Ms Richardson said.
Ms Richardson submitted the modified arrangement with Kuan Koi, which continued until 2020, was initiated and maintained by the VIP credit and collections team.
Legal and risk assessments weren’t conducted and the arrangement was not formally approved or disclosed to the board, Ms Richardson said.
Star accepted it was concerning the arrangement continued without the board’s knowledge or the proper checks in place.
“They amount to significant failures on the part of the managers who were responsible,” Ms Richardson submitted.
The hearing continues.
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