A settlement agreement has been approved by the Federal Court of Australia between SkyCity Entertainment Group and Austrac to settle civil penalties proceedings.
Last month, SkyCity agreed with Austrac that it would pay a total civil penalty of AU$67.0m (PS35.0m/EUR41.1m/US$44.7m). The penalty is for historical failures in anti-money-laundering (AML), counter-terrorism funding (CTF), and other areas at the casino’s Adelaide location.
SkyCity, Austrac and other parties presented separate applications for approval during an earlier hearing today (7th June). The court here approved the penalty and ordered SkyCity pay Austrac’s $3,0m costs.
Peter Soros, acting CEO of Austrac, welcomed this decision. Peter Soros, acting CEO of Austrac, welcomed the decision.
Soros stated that criminals would always try to use the gambling industry to wash their dirty cash. If casinos or other gambling institutions have poor AML controls and systems, then they are vulnerable to criminal abuse.
The result of today’s hearing shows that Austrac will take legal action against businesses who do not comply with legislation, such as casinos. Businesses that ignore their obligations affect the Australian community because they leave the door wide open for criminal activity.
Money laundering is not an innocent crime. Money laundering occurs when criminals try to wash their dirty money, which they have obtained through lucrative criminal activities such as trafficking in drugs and humans. This money is then re-invested to increase criminal activity and harm.
SkyCity: What failures have been identified?
This penalty is for a criminal case which was brought to light by Austrac in December 2022. Austrac stated that SkyCity Adelaide had a history of “serious, systemic noncompliance with AML/CTF laws”.
Austrac took action in the past, but it was several years old. In September 2019, an industry-wide campaign to ensure compliance was launched. SkyCity received notification of the alleged misconduct in June 2021.
SkyCity has a number of issues, including its AML/CTF programs failing to comply with the AML/CTF Act. Austrac said the group also failed to conduct appropriate customer due diligence.
Austrac highlighted that the failure of casinos to adhere to the Act for many years led to high-risk clients moving millions of dollars in a casino without knowing the origin and owner of those funds.
SkyCity also provided services to customers at high risk and through channels with high risks without any appropriate controls based on the level of risk. Austrac reported that it had failed to conduct required checks for 121 clients, even when SkyCity was aware of the players’ law enforcement interests or there were signs they posed an increased risk of money-laundering.
SkyCity responded by admitting that its violations made it susceptible to criminal exploitation. SkyCity also acknowledged that it put the Australian financial system and community at risk of money laundering.
Concerns raised by Austrac
SkyCity took action to resolve the issue after Austrac brought it up. The remediation process is ongoing.
SkyCity appointed an expert independent to assess its AML/CTF program at Adelaide Casino and other functions in order to find areas of improvement. The review took place on July 20, 2021, and led to significant changes in the casino.
SkyCity has developed an AML program for Adelaide’s casino. The AML enhancement programme takes into consideration the failures highlighted in the original case brought against the Adelaide casino.
SkyCity Adelaide also implemented numerous changes to its governance and has expanded the legal, compliance and financial crime teams. The group also committed to investing in new AML/CTF resources and capabilities, and strengthening its relationships with law-enforcement agencies.
Austrac is continuing to crack down on those who break the rules
Austrac’s second settlement against Australian casinos is a civil penalty. Crown Melbourne and Perth Casinos were ordered by the Federal Court to pay $450.0m in penalties for AML/CTF Act violations.
Crown’s decision to take enforcement action is the culmination of a long-running process, which began in 2022. The failure to properly assess money laundering risks and terrorist financing was one of the breaches discovered.
Last July, the Federal Court approved an amount that will be paid in two-year installments.
Austrac’s Soros stated that “our continued efforts will act as an effective deterrent to all Australian casino operators who believe they can escape their AML/CTF requirements.”
SkyCity is also facing a penalty in New Zealand
SkyCity reached a settlement last month with New Zealand’s Secretary of Internal Affairs (DIA) regarding AML/CFT violations.
DIA filed a high court case against SkyCity, and SkyCity Casino Management Limited. subsidiary. It is a violation of the Anti-Money Laundering and Counter-Financing of Terrorism Act 2009
These breaches are mostly historical, and some were reported to DIA by the operator. It was noted that the operator has implemented a number of measures to avoid future issues.
SkyCity settled the case by agreeing to a fine of NZ$4,16m. The court will have the final word on the penalty.
SkyCity lowers its full-year forecast
SkyCity, in light of the regulatory uncertainties that have surrounded it this year, has reduced its guidance for certain figures. SkyCity’s underlying EBITDA for 2024 and its net profit will be less than anticipated.
The underlying EBITDA for the 12-month period ending 30 June is expected to be between NZ$280m – NZ$285m. It is less than the initial estimate of between $290m and $310m. Net profit is expected to be between $120m and $125m. This falls short of the earlier forecasts for $125m to $150m.
SkyCity is affected by several factors, such as the challenging economy that has a negative impact on customer spending. The group does note that visitor numbers remain high across the board.
SkyCity mentions a new delay to the opening of Horizon Hotel, in Auckland (New Zealand). It also notes that Adelaide Casino Duty expenses in Australia could increase during the financial year 2024.
Group members said some of the issues would continue to affect performance into 2025. SkyCity is now under the direction of Jason Walbridge who will take over the CEO role next month. Walbridge replaces Michael Ahearne who left the group recently.
Julie Amey, the chief financial officer of SkyCity has resigned. SkyCity also named Andrew McPherson chief information officer, on a permanent basis.
