Last month, SkyCity agreed with Austrac that it would pay a total civil penalty of AU$67.0m (£35.0m/€41.1m/US$44.7m). This is in relation to historical anti-money laundering (AML) and counter-terrorism financing (CTF) failings at its land-based casino in Adelaide.
SkyCity and Austrac put forward separate submissions for approval at a hearing that took place earlier today (7 June). Here, the court approved the agreed penalty fee and also ordered SkyCity to pay Austrac’s costs of $3.0m.
Austrac’s acting CEO, Peter Soros, welcomed the decision. He said casinos, like all businesses, must take their AML obligations seriously.
“Criminals will always seek to take advantage of the gambling sector to clean their dirty money,” Soros said. “If casinos and other gambling entities have weak AML systems and controls, they leave themselves vulnerable to criminal exploitation.
“Today’s result shows Austrac is prepared to take action when businesses, including casinos, fail to comply with the legislation. Businesses who ignore their obligations are affecting the Australian community by leaving the door open to criminal activity.
“Money laundering is not a victimless crime. It happens because criminals are trying to clean their dirty money obtained by lucrative illegal activities like trafficking drugs or humans and it is often reinvested to further criminal enterprises and amplify these harms.”
What failings were identified at SkyCity?
The penalty refers to a case that came to light in December 2022. At the time, Austrac said SkyCity Adelaide demonstrated a pattern of “serious and systemic non-compliance” with national AML and CTF laws.
However, the case dates back several years prior to Austrac taking action. An industry-wide compliance campaign launched in September of 2019, with SkyCity notified of the alleged wrongdoing in June 2021.
Key issues include SkyCity’s AML/CTF programmes failing to meet the requirements of the AML/CTF Act. Austrac also said that the group failed to carry out appropriate ongoing customer due diligence.
Austrac also highlighted how failure to comply with the Act over many years allowed high-risk customers to move millions of dollars through the casino, in ways that made the source and ownership of the funds unclear.
SkyCity was also found to have provided services through high-risk channels and to high-risk customers without appropriate risk-based controls. Austrac noted how it failed to carry out required checks on 121 customers, including where SkyCity knew these players were subject of law enforcement interest, or where there were indications some posed a higher risk of money laundering.
In response, SkyCity admitted its contraventions made it vulnerable to criminal exploitation. It also accepted it exposed both the Australian community and financial system to money laundering and terrorism financing risk.
Addressing concerns raised by Austrac
Since Austrac raised the matter, SkyCity has taken steps to address the issues identified in these proceedings. This remediation remains ongoing.
So far, SkyCity has appointed an independent expert to review its AML/CTF programme at the Adelaide casino and broader functions to identify areas for improvement. This took place in July 2021 and has led to changes at the venue.
On the back of this, SkyCity developed a AML enhancement programme for the Adelaide casino. This takes into account failings listed in the initial case raised against the casino.
SkyCity Adelaide has also made numerous governance changes and expanded its financial crime and legal and compliance teams. In addition, the group committed to new investment in internal AML and CTF resourcing and capability, as well as strengthening relationships with law enforcement agencies.
Austrac continues to clamp down on rule-breakers
Today’s settlement marks the second civil penalty Austrac has secured against Australian casinos. Last year, the Federal Court ordered Crown’s Melbourne and Perth casinos to pay a $450.0m penalty over AML/CTF Act breaches.
Crown’s agreement to enforcement action marks the conclusion of a process that began in 2022. Breaches discovered include failing to appropriately assess the money laundering and terrorism financing risks.
The Federal Court gave its approval to the fine, which will be paid over a period of two years, last July.
“Our continued efforts in this space will act as a strong deterrent for all casino operators in Australia who think they can avoid their AML/CTF obligations,” Austrac’s Soros said.
SkyCity also set for penalty in New Zealand
SkyCity last month reached a settlement with New Zealand’s secretary of the department of internal affairs (DIA) over AML/CFT breaches.
Earlier this year the DIA announced it would file high court proceedings against SkyCity and its SkyCity Casino Management Limited (SCML). subsidiary. This relates to non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
The operator said these breaches mainly refer to historical matters, with some previously self-reported to the DIA. The operator added it has taken a series of steps to prevent issues in the future.
Settling the case with the DIA, SkyCity agreed a penalty of NZ$4.16m, with the court having the final say on this.
SkyCity reduces full-year guidance
Against this backdrop of regulatory uncertainty, SkyCity has this week reduced guidance on certain full-year figures. Both underlying group EBITDA and net profit after tax for the 2024 financial year are set to be lower than expected.
For the 12 months to 30 June, underlying group EBITDA is forecast at between NZ$280m and NZ$285m. This is lower than its initial guidance of $290m to $310m. As for net profit, this is set to range from $120m to $125m, behind earlier guidance of $125m to $135m.
Several factors are impacting SkyCity, including a challenging economic environment hitting customer spend. However, the group notes visitor numbers across all sites remain strong.
SkyCity also references a further delay in the opening of its Horizon Hotel in Auckland in New Zealand. In addition, it notes a potential increase in Adelaide casino duty expense in Australia during the 2024 financial year.
The group said that some of these issues will continue to impact performance in the 2025 financial year. SkyCity will enter the next year under the leadership of Jason Walbridge, who takes over as CEO next month. Walbridge is replacing Michael Ahearne, who recently left the group.
Other senior-level changes include Julie Amey resigning as chief financial officer. In addition, SkyCity has named Andrew McPherson as chief information officer on a full-time basis.
Original article: https://igamingbusiness.com/legal-compliance/legal/court-approves-skycity-austrac-civil-penalty-agreement/
