Proceedings will be filed against SkyCity on 16 February. These relate to SCML’s alleged non-compliance with the New Zealand Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
Should the department’s claim be accepted in whole or partly by the high court, SCML may face a civil penalty. In line with the Act, SkyCity’s maximum liability for the case would be NZ$8.0m (£3.9m/€4.5m/US$4.9m).
Confirming the news in a statement, SkyCity says the pending proceedings follow a review of SCML’s compliance. SCML holds the licence for operating SkyCity land-based casinos in Auckland, Hamilton and Queensland.
The draft pleadings set out five separate causes of action seen as “significant” compliance issues related to the Act. Details of these are not yet available but SkyCity says they mainly refer to historical matters. SkyCity adds that some incidents were previously self-reported to the department.
SkyCity also noted that since late 2021, it has been running an anti-money laundering and counter-terrorism financing enhancement programme to address compliance systems and correct historical shortcomings. This includes investment in people and technology, as well as reviews of processes and systems to identify areas for improvement.
SkyCity “disappointed” over non-compliance
Responding to the civil proceedings, SkyCity committed to working with the department to rectify any issues.
“SkyCity is disappointed that it has not met the standards to which it needs to hold itself and this has resulted in the action taken by the department,” SkyCity said. “SCML and SkyCity will engage constructively with the department in relation to the proposed proceedings, with a view to resolving these matters expeditiously.
“SkyCity is committed to continuing to uplift its processes and systems, particularly with respect to anti-money laundering and counter-terrorism financing and host responsibility matters.
“Given that the matter will be before the court, it would be inappropriate for SkyCity to comment further at this stage.”
Another blow for SkyCity
The proceedings follow a turbulent 2023, with SkyCity hit by a series of blows. One overarching concern for the operator is a potential licence suspension in New Zealand.
In September, New Zealand’s secretary of the department of internal affairs applied to suspend SkyCity’s casino licence for an estimated 10 days. This was also in relation to the SCML subsidiary. It is not clear whether the civil proceedings relate to this case.
There are also questions regarding SkyCity in Australia. Near the end of 2022, the Australian Transaction Reports and Analysis Centre launched federal proceedings against SkyCity over anti-money laundering failings at SkyCity Adelaide.
The operator in May 2023 launched a review into its counter-terrorist financing and anti-money laundering programmes. This is in line with an order from the Consumer and Business Services, the gaming regulator for South Australia. SkyCity in August also made a provision of AU$45m ahead of an assumed civil penalty from Austrac.
In October, SkyCity announced Michael Ahearne is to step down from his role as chief executive. Ahearne is due to leave the business in March and will return to Europe and spend more time with his family.
Warning over 2024 earnings
The year ended with yet more concerning news for SkyCity when in December it warned adjusted EBITDA could decline in its 2024 financial year. This is despite it previously saying it expected to report an increase.
SkyCity said adjusted EBITDA should be between NZ$290.0m and NZ$310.0m, based on the first five months of the financial year. It posted $310.0m in adjusted EBITDA during FY23 and forecast a modest increase in FY24.
However, several factors have led to SkyCity reducing guidance to the point where earnings could in fact decline. These include a reduction in electronic gaming machine revenue in New Zealand and a weaker-than-expected performance in Adelaide, Australia.
Original article: https://igamingbusiness.com/legal-compliance/legal/skycity-civil-penalty-proceedings-new-zealand/
