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SkyCity resolves non-compliance with New Zealand DIA

by Bela Ksovreli
Published: Last Updated on 77 views 5 minutes read

SkyCity Entertainment Group reached a settlement agreement with New Zealand’s Department of Internal Affairs over the breach of its anti-money laundering obligations and the counter financing of terrorism.

The DIA filed a high court case against SkyCity in February. The alleged violation of the Anti-Money Laundering and Counter-Financing of Terrorism Act 2009 is at issue.

The draft pleadings outline five causes of action that are deemed “significant” in relation to Act compliance. SkyCity, however, said that they mainly relate to historic matters and some incidents had been self-reported previously to the DIA.

SkyCity has also announced that it is running a program to enhance its anti-money laundering, counter-terrorism funding, and other programs since the end of 2021. The aim is to improve compliance and fix historical deficiencies. It includes investments in technology and people, and reviews of systems and processes to identify improvement areas.

SkyCity fined NZ$4,16m

SkyCity was able, after taking all of this into consideration, to come to a resolution with the DIA. This included admitting to having breached its obligations under the Act.

Between February 2018 and march 2023, there were failures. The DIA raised issues relating to its AML/CFT compliance and risk assessment programme. This included monitoring accounts and transactions as well as conducting enhanced due diligence on customers and ending existing business relationships if necessary.

SkyCity is not directly implicated in either money laundering or terrorism funding, according to the DIA.

After reaching a settlement, the parties recommend that the proceedings be moved to an infringement hearing. A penalty amount is determined here. They will jointly submit a penalty of NZ$4.16m (PS2.00m/EUR2.34m/US$2.54m), although final determination is for the court.

Mike Stone, director of the AML/CFT Group at the DIA said, “This is a significant outcome.” We have reached our goal without having to spend time and money on lengthy court cases.

SkyCity has admitted to these serious regulatory violations and accepted responsibility for the failures.

New Zealand: Taking Action on Failures

Stone acknowledged the efforts made by SkyCity to address these failures.

Stone stated that it was encouraging to observe the progress SkyCity had made in improving its performance and to witness its commitment to continuing to improve. We will continue to work closely with SkyCity on its compliance obligations in the future.

SkyCity has taken steps to refresh its board and recruit new directors who have specialist experience in risk management. A dedicated committee for risk and compliance was also established. SkyCity also enhanced its internal audit capability and increased external audit scrutiny, and appointed a chief risk officer.

SkyCity, in light of the wider changes that have taken place, says that it now applies higher standards to due diligence when applicable. SkyCity is increasing its capacity in the financial crime, compliance and risk teams as well.

SkyCity says that several initiatives are being implemented to improve the operations. SkyCity has also pledged to introduce mandatory carded playing across New Zealand before mid-2025.

SkyCity’s executive chair Julian Cook stated that “over the last few years we have made considerable progress towards upgrading our AML/CTF systems.” This does not diminish the severity with which SkyCity takes these breaches, and we’re disappointed to be in this situation.

As a casino operator we have a major role to play in the fight against money laundering and terrorist financing. We take this responsibility very seriously. In the name of our board and management, I accept these past failings and apologize.

We have failed to live up to the standards we set for ourselves, and we’ve also fallen short in meeting the expectations we had of regulators, our customers, investors, and the communities that we belong to. “We are committed and we have started delivering the change required to achieve.”

SkyCity settles noncompliance cases in Australia

SkyCity announced an agreement similar to the New Zealand one just a few days before.

SkyCity has agreed to pay AU$67.0m for historical AML/CTF failings. SkyCity, Austrac and the Federal Court of Australia have submitted separate applications for approval to a 7th June hearing.

In reality, the case was brought to light several years ago. In September 2019 an industry-wide campaign of compliance began. SkyCity was notified in June 2021 about alleged misconduct.

Austrac stated that SkyCity Adelaide had exhibited a pattern “of serious and systemic noncompliance with the national AML/CTF laws”.

The failure to assess money laundering risks and terrorist financing is one of the issues. SkyCity did not implement risk-based controls and systems in AML/CTF programs, nor set up a framework to oversee these projects by the board or senior staff.

Other concerns are the lack of a monitoring program for transactions, and not being able to identify suspicious activities. Austrac said SkyCity did not have an enhanced due diligence program to conduct additional checks for higher-risk customers.

SkyCity, as in New Zealand accepted the findings of the investigation and accepted the fine. The group had set aside $45.0m to anticipate a civil fine, but in the end it was much higher.

SkyCity’s new leadership style

SkyCity’s senior management has undergone changes in response to this.

SkyCity appointed Jason Walbridge, a former gambling executive with extensive experience in the industry, as CEO of its company on April 1. Walbridge replaces Michael Ahearne who left the group recently.

Julie Amey, a former chief financial officer has also resigned. Amey, who will officially step down from her position as chief financial officer on the 25th September, will remain in his role for another six months.

SkyCity also named Andrew McPherson chief information officer in March. Since November, he had served in this role as an interim.

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