Why Good Governance and Honest Communication Matter

Importantly, the case has only been partially heard. The Court has made findings about liability, but penalties and any disqualification orders will be decided at a later date. AUSTRAC’s civil case against The Star for alleged major AML/CTF breaches will likely follow this penalty decision.

While the case involved a casino operator, the Court’s reasoning contains important lessons for clubs, particularly around board oversight, compliance, AML/CTF risk and dealings with regulators and banks.

Below are the key takeaways for clubs.

Case Background

ASIC alleged that executives and non‑executive directors at The Star failed to properly identify, manage and escalate serious risks, including:

• Ongoing relationships with high‑risk junket operators
• Weak AML/CTF controls
• Misleading or incomplete information being provided to banks and payment providers
• Important risk information not being fully shared with the Board

The Court found that some senior executives breached their duties, while non‑executive directors were not found liable on the specific facts of the case.

Why This Matters for Clubs

Although clubs are not casinos, the Court made it clear that:

• Gaming, AML/CTF and regulatory risks are board‑level issues, not just operational matters
• Regulators and banks expect honesty, accuracy and early escalation of problems
• Claiming ignorance does not constitute a robust defence when warning signs were present

These principles are directly relevant to clubs operating gaming machines and managing AML/CTF, licensing and governance obligations.

Key Governance Lessons for Clubs

1. Gaming and compliance concerns are key governance matters. Clubs should ensure gaming operations, cash handling, and regulator reporting are regularly and transparently discussed, with thorough examination at the board level.
2. Legal, risk and compliance officers must report major issues directly to the board. Specifically, senior legal staff cannot separate or limit their responsibilities, and legal expertise increases accountability.
3. Passive reliance is risky when red flags appear. Boards shouldn't rely only on management if there are compliance issues, regulator notices, audit findings, unusual cash activity or negative media. They should ask questions, seek independent advice and document decisions.  
4. Ignorance is not a valid defence. The Court was explicit that boards control the information they receive. Clubs cannot defend governance failures through claims of long board packs or technical complexity. 
5. The Court views misleading banks or regulators as a grave matter, regardless of enforcement actions. All communication with banks, regulators and payment providers must be accurate and complete, especially regarding AML/CTF issues.
6. Failure to manage suitability risks can lead to disciplinary action, licence conditions or reputational harm. The Court stressed that boards must oversee regulatory and licence-related risks, including high-risk relationships.
7. Clear documentation protects clubs; case outcomes often depend on what is recorded. Important risk discussions, decisions and reasons for ongoing practices should be clearly documented.

Strong governance means identifying and managing risks early, escalating them appropriately, and maintaining transparency with boards, regulators, and banks.

Clubs that can demonstrate active oversight, honest communication and clear documentation are better placed to manage regulatory and reputational risk.

If you have any questions, contact ClubAssist on 1300 730 001 or [email protected].