The KPMG report incensed Star CEO Matt Bekier, who disputed the accuracy of its findings, former Star employees told an inquiry on Tuesday.
KPMG partner Alexander Graham says key stakeholders within Star were given the opportunity to clear up any factual inaccuracies before the report was finalised.
The NSW Independent Liquor & Gaming Authority is investigating whether The Star Sydney is fit to keep its casino licence.
The inquiry follows media reports last year, stemming from the KPMG report, accusing Star's casinos of enabling suspected money laundering, organised crime, fraud and foreign interference.
Mr Graham said Star did not have a mature program to combat money laundering or terrorism financing, and management did not have a good understanding of the legal requirements.
Mr Graham and fellow KPMG partner Jeff O'Sullivan are appearing as witnesses at the inquiry.
Earlier on Tuesday, Star's former chief risk officer Paul McWilliams resumed his evidence and said the KPMG pair were invited to be available for a May 2018 audit committee discussion of the report, but sat in the waiting room and were never invited into the meeting.
Mr Bekier did attend however, he said.
The last to arrive to the "very tense" meeting, he walked in "making a show of throwing (the report) on to the table", Mr McWilliams told the inquiry.
The "broad theme" of his reaction was that the report contained multiple errors and KPMG did not know what they were doing, Mr McWilliams said.
The CEO's reaction made him "wonder if there is in fact something materially wrong with the report".
Star's former internal audit head Tarnya O'Neil largely backed up Mr McWilliams' recollection of the meeting.
She was surprised about the reaction from the CEO regarding factual inaccuracies.
Mr Bekier took issue with the analysis of junkets but provided few specifics, she said.
Mr McWilliams and Ms O'Neil both agreed the report found a lack of due diligence in relation to junkets, a significant revenue source that carried numerous risks relating to transparency around the source of funds being used to gamble.
The report also queried Star's risk assessment of gamblers.
Star saw no difference in the risk of money laundering or terrorism financing between someone walking into the casino with $5000 than they did $200,000.
Ms O'Neil said "that should raise cause for concern".
The KPMG report was the first she had heard of the practice.
It wasn't raised during her annual interviews with general managers where they were to assess potential risks to the business.
She was also not told about the use of China Union Pay bank cards for the purposes of gambling.
Mr McWilliams raised a concern internally regarding those cards after hearing an "anecdotal mention" of their use, that he believed was a once-off, but he told the hearing on Monday he never received a response.
The inquiry heard last week Star allowed high-rollers to bill $900 million as hotel expenses to dodge China's tight anti-gambling and capital flight laws.
Star says it has an unwavering focus on preventing criminal activity at its casinos, which also include The Star Gold Coast and Treasury Brisbane.
The hearing continues.
