The Star casino enabled overseas high-rollers to disguise millions of dollars in cash transfers through a proxy payment company that handed out loans to help patrons gamble, an inquiry has heard.
Hong Kong subsiduary EEI Services was entirely controlled by Star Entertainment to funnel money into the casino and to enable the repayment of gambling debts.
Lawyers arguing against Star’s suitability to hold a casino licence on Thursday raised serious concerns about EEIS, which seemed to have “no commercial purpose”, and said Star had opened its door to intrinsic money laundering risks.
Naomi Sharp, SC, counsel assisting the inquiry into The Star.
“EEIS acted entirely for the benefit of the casino operator. It had no capital of its own. The only reason it made loans was for the purpose of equipping junket operators or patrons to gamble in the casino,” counsel assisting the inquiry, Naomi Sharp, SC, suggested.
Former Star chief executive officer Matt Bekier and former chief financial officer Harry Theodore were directors of EEIS.
Sharp on Thursday continued her closing remarks to the inquiry probing Star’s fitness for a licence, which was triggered by revelations of alleged criminal infiltration and money laundering at the Pyrmont casino.
Adam Bell, SC, who is overseeing the inquiry, has been repeatedly told that lawyers do not believe Star is suitable for a casino licence.
The inquiry heard claims that Star used the EEIS arrangement from 2019 to help customers in Macau disguise the fact they were making large cash payments to the Sydney casino, the inquiry heard.
It was an alternative method established after the Bank of China shut down Star’s Macau bank account because it would not touch gambling funds. Gambling is illegal in China.
A forensic accounting report tendered to the inquiry claimed the EEIS arrangement showed Star was willing to engage in “window dressing” to navigate potential regulatory and legal obstacles.
The report suggested it placed the casino at “grave risk of failing to mitigate, manage and report the risk of money laundering and terrorism financing and or potentially being complicit in enabling … illicit funds”.
Sharp said it revealed a need for “more active stewardship” and interrogation by the board, expressing concern that there was no transaction monitoring of the EEIS accounts until late 2019.
“The only thing those accounts were monitored for, until about all guests in 2019, was to make sure money was getting into those accounts,” she said.
The inquiry has heard that prior to the EEIS arrangement Star employed an interim channel between 2018 and 2019 through which a Macau-based junket associate, Kuan Koi, accepted millions of dollars from patrons into his own account and transferred them to the casino.
Koi was moving money as an unlicensed remitter, obscuring from law enforcement the true nature of the source of funds, Sharp suggested. He had no obligation to conduct customer checks and often collected cash directly from casino cages in Macau.
“[It is] just completely unacceptable for a casino, in view of the intrinsic money laundering risks. here,” Sharp said.
The inquiry has previously heard claims that employees of the casino misled the Bank of China in Macau with fake documents about the origin of deposited funds from 2013 to 2017. Star used unsigned template documents to vouch for the source of funds, despite never conducting any check.
Lawyers for the inquiry say Star is not suitable for a casino licence.Credit:Michele Mossop
When Star’s chief financial crime officer Skye Arnott was asked about the process during a hearing last month, she agreed it was concerning because of its “obscuring the source of funds,” Sharp said.
“Obscuring is something of a euphemism,” added Bell.
“Indeed,” Sharp replied.
Between January and November 2017 alone, the Bank of China accounts in Macau accepted about $200 million. The cash redemptions were driven by customers seeking to avoid electronic funds transfers to a bank account held in the name of a casino.
The inquiry continues.
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