An inquiry into Sydney's Star casino has been shown CCTV footage from 2018 of staff from a Macao-based junket operator giving a gambler a brown per bag for bundles of $50 notes he'd cashed out, despite being banned from conducting cash transactions due to money laundering concerns.
Star's due diligence group manager, Angus Buchanan, told the hearing that it appeared money laundering was taking place at the casino.
"Was one of your concerns that from the evidence you'd seen it appeared at least on occasions in 2018 an organisation with links to the Triads had been running a casino within a casino?" Commissioner Adam Bell SC asked.
"I agree that was my concern, that was evident from the footage we viewed earlier and the documentation I'd read," Mr Buchanan replied.
The inquiry heard that in 2019, Star Entertainment CEO Matt Bekier announced that a "mutual decision" had been taken for Suncity to scale shut its Sydney operation after its backer Alvin Chau was accused of having links to organised crime and barred from entering Australia.
Mr Buchanan told the inquiry that this was untrue.
He said it was Alvin Chau who in August 2019 informed the casino that he was shutting down his high-rollers salon at Star, which catered for Chinese gamblers.
But Mr Buchanan said the following month the junket operator moved from one room, known as Salon 95, to another and carried on.
"They moved to Salon 82 but with no signage of Suncity," he said.
"I don't know if any other changes had been made but they certainly weren't articulated to me … they continued in another room without a service desk."
An internal investigation by the Star found Suncity was storing large amounts of cash in sports bags on a balcony off its gaming room and staff were frequently exchanging casino chips for cash.
As part of the junket arrangement, Suncity was prohibited from exchanging any cash for chips and retaining cash from players at their service desk.
Star's response to the breach was to issue a warning letter.
The inquiry yesterday heard junkets were extremely lucrative for Star Entertainment, representing 12 per cent of overall gross revenue in the 2019 financial year.
Mr Buchanan agreed stronger action should have been taken against Suncity.
"Shouldn't this whole arrangement have been stopped at the point that we saw those incidents on the CCTV footage in the view of the fact Mr White (Star's general counsel Oliver White) had directed the salon not operate a cage [where large sums of cash are exchanged]?," counsel assisting Naomi Sharp SC asked.
"That's correct, I agree," Mr Buchanan said.
"It is concerning and I think it would have been worth speaking face to face with the junket operator to make clear in no uncertain terms this behaviour wouldn't be tolerated."
"Do you agree this conduct you have referred to... that took place from 12 May to 12 July, 2018 meant there was a very high risk money laundering was occurring in Salon 95," Ms Sharp said.
"I agree," Mr Buchanan replied.
The inquiry also sighted an email from Star's Sydney investigator Andrew McGregor on May 14, 2018
"Today's activities with Suncity have been very strange," the email read.
"We have an entity within our four walls which is totally non-compliant with reasonable requests for basic information.
"I'm going to call it out early, Suncity is running a business model under our noses which is problematic for Star Entertainment group with regards to AMLCTF (anti-money laundering, counter-terrorism financing) laws."
