Star (ASX:SGR) share price latest to fall on anti-money laundering investigation

AUSTRAC confirms it has begun an investigation into the casino operator for breaches of anti-money laundering law out of its Sydney casino.

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An unhappy investor holding his eyes while watching a falling ASX share price on a computer screen.

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The Star Entertainment Group Ltd (ASX: SGR) share price is down today. Star is the latest ASX company to confirm it is being investigated by financial crimes watchdog AUSTRAC for potential “serious” breaches of anti-money laundering and counter-terrorism legislation.

At the time of writing, shares in the casino operator are trading for $3.83 – down 3.53%. At the same time, the S&P/ASX 200 Index (ASX: XJO) is only 0.09% lower.

Shares in National Australia Bank Ltd (ASX: NAB), Crown Resorts Ltd (ASX: CWN), and SKYCITY Entertainment Group Limited (ASX: SKC) are all down after all confirmed they are also being investigated by AUSTRAC.

Let’s take a closer look at today’s news.

Star share price dims on investigation

In a statement to the ASX, Star Entertainment said AUSTRAC has begun investigations into the company for “potential serious non-compliance… with the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1).”

According to Star, the investigation includes “concerns” about proper customer due diligence and potentially not maintaining an anti-money laundering or counter-terrorism financing program. The statement goes on to say these alleged breaches were identified in September 2019 and relate to FY16 and FY19. The matter is now being handled by AUSTRAC’s enforcement division.

Star also says AUSTRAC has not made any decision yet about what action it will take and if the company will face any penalties, and to what extent. AUSTRAC has requested to review documents from Star as part of the investigation, according to the gaming operator. The prospect of hefty fines may be weighing on investors’ minds and the Star share price.

In its statement, Star says it “takes its anti-money laundering obligations very seriously and will fully co-operate with AUSTRAC in relation to its requests for information and documents and the investigation.”

A spokesperson for AUSTRAC confirmed the agency is investigating Star’s Sydney casino for potential breaches and that the investigation stems from work that began in 2019. The spokesperson goes onto say AUSTRAC is working with state and territory agencies in regard to potential money-laundering in casinos.

Anti-money laundering blitz

As mentioned, Star is not the only ASX-listed company that is facing a government probe into potential breaches of law. NAB, SkyCity and Crown (which Star is currently vying to takeover) have all said they are being investigated by AUSTRAC.

Between the four companies, a collective $3.27 billion in value has been obliterated in the market due to today’s news.

The news could potentially have ramifications for Star’s takeover bid of Crown. Crown has been under pressure to sell itself after being refused a gaming license in NSW due to breaches in anti-money laundering legislation.

Star share price snapshot

Over the past 12 months, the Star share price has gained 17%. Today’s losses see the company’s shares come down to a level not seen in two months.

Given its current valuation, Star Entertainment has a market capitalisation of $3.6 billion.

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