In February, the DIA announced it would file high court proceedings against SkyCity and its SkyCity Casino Management (SCML) subsidiary. This relates to alleged non-compliance with the country’s Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
Draft pleadings set out five separate causes of action seen as “significant” compliance issues related to the Act. However, SkyCity said they mainly refer to historical matters and that some incidents were previously self-reported to the DIA.
SkyCity also said, since late 2021, it has been running an anti-money laundering and counter-terrorism financing enhancement programme. This is to address compliance systems and correct the historical shortcomings. This includes investment in people and technology, as well as reviews of processes and systems to identify areas for improvement.
SkyCity set for NZ$4.16m penalty
Taking all this into account, SkyCity has been able to reach a settlement with the DIA over the matter. Part of this included admitted to breaching it obligations set out under the Act.
Failures took place between February 2018 and March 2023. The DIA flagged issues covering its AML and CFT risk assessment and compliance programme, as well as the monitoring of accounts and transactions, conducting enhanced customer due diligence and terminating existing business relationships when required.
The DIA, however, noted there is no evidence to suggest SkyCity was directly involved in money laundering or terrorism financing.
On reaching the settlement, parties will recommend to the high court that proceedings can move to a penalty hearing. Here, a penalty amount will be determined. They will jointly submit a penalty of NZ$4.16m (£2.00m/€2.34m/US$2.54m), although final determination is for the court.
“This agreement is an impactful outcome” AML/CFT group director at the DIA, Mike Stone, said. “We have achieved our desired result without the extended duration and cost of court proceedings.
“While we consider these regulatory breaches to be serious, we are pleased that SkyCity was able to admit to the breaches and acknowledged responsibility for what were significant failings.”
Taking action over failures in New Zealand
Stone also recognised the work SkyCity has done in the wake of these issues in terms of addressing the failures.
“It is encouraging to see the work SkyCity has already done to lift its performance in this area and its public commitment to continue to improve,” Stone said. “We will be working closely with SkyCity in the future in relation to its ongoing compliance obligations.”
Such efforts include refreshing the SkyCity board, recruiting new directors with specialist risk experience and establishing a dedicated risk and compliance committee. SkyCity has also increased internal audit capabilities and external audit scrutiny and appointed a group chief risk officer.
Looking at wider changes, SkyCity says it is now applying higher standards of due diligence on customers as appropriate. It is also increasing capacity across its financial crime, risk and compliance and host responsibility teams.
SkyCity adds that work is ongoing, with several initiatives set to further improve operations. These include a pledge to implement mandatory carded play across all New Zealand by mid-2025.
“Over the past few years, considerable progress has been made towards upgrading our AML and CTF systems,” SkyCity executive chair Julian Cook said. “This does not lessen the seriousness with which we take these breaches and we are disappointed that SkyCity is in this position.
“As a casino operator, we play a key role in combatting money laundering and terrorism financing and we take that responsibility seriously. On behalf of the board and management team, I accept and apologise for these long-standing failings.
“We have fallen short of the standard we should hold ourselves to, alongside failing to meet the expectations of our regulators, customers, shareholders and communities we are part of. We are committed to, and have begun, delivering the level of change that is required to meet.”
SkyCity also settles non-compliance case in Australia
The New Zealand settlement comes just days after SkyCity also announced a similar agreement in Australia.
Agreed with the Australian Transaction Reports and Analysis Centre (Austrac), SkyCity is set to pay AU$67.0m over historical AML/CTF failures in the country. The proposal is with the Federal Court of Australia, with SkyCity and Austrac putting forward separate submissions for approval at a hearing on 7 June.
The case came to light in December 2022 but concerns actually date back several years. An industry-wide compliance campaign began in September 2019, with SkyCity notified of alleged wrongdoing in June 2021.
At the time, Austrac said SkyCity Adelaide demonstrated a pattern of “serious and systemic non-compliance” with national AML and CTF laws.
Issues include failing to appropriately assess the money laundering and terrorism financing risks. SkyCity also did not include risk-based systems and controls in AML/CTF programmes, nor establish a proper framework for board and senior staff oversight for these projects.
Other concerns include not creating an appropriate monitoring programme for transactions and identifying suspicious activity. Austrac also said SkyCity lacked an appropriate enhanced customer due diligence programme to carry out additional checks on higher risk customers.
As is the case in New Zealand, SkyCity accepted the findings and agreed to the penalty. The group set aside $45.0m in anticipation of a civil penalty, but the final amount is substantially higher.
New-look leadership for SkyCity
Against this backdrop, SkyCity has been making changes to its senior management team.
In April, SkyCity announced experienced gambling executive Jason Walbridge as its new CEO with effect from July. Walbridge is replacing Michael Ahearne, who recently left the group.
Elsewhere, Julie Amey has resigned as chief financial officer. Amey will continue as CFO for a further six months, officially stepping down on 25 September.
In addition, SkyCity in March named Andrew McPherson as chief information officer. He had been serving in the role on an interim basis since November.
Original article: https://igamingbusiness.com/legal-compliance/compliance/skycity-settles-non-compliance-case-with-new-zealand-dia/
