Auckland-based operator, SkyCity Entertainment Group, has set aside AU$45m in preparation of a civil penalty over anti-money laundering (AML) failings in its Adelaide casino. The group is just the latest target in a series of investigations into physical casinos in Australia by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Let’s take a look at what the failings were, what steps the operator is taking to overcome the issues and other casinos facing similar scenarios.
Last December, AUSTRAC launched federal proceedings against SkyCity. At the time of the investigation, AUSTRAC said that its South Australian venue had demonstrated systemic and serious non-compliance with both AML and counter-terrorist financing (CTF) laws.
As a result of the proceedings, SkyCity has put aside funds based on its estimates of the potential exposure to penalties, along with the legal costs associated with the proceedings. Each alleged infringement could result in a maximum penalty of anywhere between $18m and $22.2m.
The group’s Adelaide casino licence has also been impaired by $45.6m. Following the announcement to open civil penalty proceedings, the review of SkyCity Adelaide’s suitability to hold a casino licence was placed on hold, pending the outcome of the case.
The allegations state that the group failed to adequately assess money laundering and terrorism financing risks. Including identifying and responding to changes of risk and assessing the likelihood and impact of any risks in line with Australian AML rules.
SkyCity also failed to establish an appropriate framework to ensure appropriate board and senior management oversight of AML/CTF programs. They also didn’t put in place a transaction monitoring program to monitor transactions and identify any suspicious customer activity.
In general, it appears there was also a lack of appropriate due diligence to conduct additional customer checks. Particularly for those customers who presented higher money laundering risks.
SkyCity has already taken steps to address some of the issues that were identified by AUSTRAC last year. This includes an independent review of its AML and CTF programmes, as ordered by the South Australia regulator. The review covers both the implementation of new programmes and the casino’s current compliance with existing AML and CTF obligations.
SkyCity isn’t the only casino operator in Australia to be facing similar issues with AUSTRAC. Star Entertainment and Crown Resorts have both faced their own proceedings in recent months.
Last September, Star Entertainment was given 14 days to defend their NSW casino licence after being found “unsuitable”. Since then, they’ve been targeted in multiple parliamentary enquiries about their misconduct.
Meanwhile, Crown Resorts were forced to pay a penalty of $450m for breaching AML laws at both its Melbourne and Perth casinos.
The proceedings are still at a relatively early stage, with both AUSTRAC and SkyCity working to agree facts and admission.
With the outcome dependent on various unknown factors, the civil penalty may end up being significantly higher, or lower, than the provision set by SkyCity. The timing of any payments for penalties is also yet to be determined.