SkyCity Entertainment Group and the Australian Transaction Reports and Analysis Centre (Austrac) have reached a mutual agreement over a hefty AUS$67m penalty. The proposed settlement is now awaiting approval from the Federal Court of Australia, with both parties prepared to present their separate submissions during a scheduled hearing on 7 June.
This substantial penalty is linked to a case that first emerged in December 2022, when Austrac highlighted SkyCity Adelaide’s “serious and systemic non-compliance” with national Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws. While the announcement of civil penalty proceedings took place in December, the concerns date back several years, actually originating from an industry-wide compliance campaign initiated by Austrac in September 2019. By June 2021, SkyCity Adelaide was alerted to its alleged violations.
Among the numerous issues identified was SkyCity’s failure to appropriately assess the risks of money laundering and terrorism financing it faced. The casino operator was criticized for not incorporating risk-based systems and controls within its AML and CTF programs, and for lacking a robust framework for board and senior staff oversight in these critical areas.
Austrac further pointed out that SkyCity did not establish an adequate monitoring program for transactions, nor did it effectively identify suspicious activities. The operator also fell short in implementing an appropriate enhanced customer due diligence program needed for additional scrutiny of higher-risk customers.
In august of the previous year, SkyCity preemptively earmarked AUS$45.0m in anticipation of a civil penalty; however, the final settlement agreed upon with Austrac significantly exceeds that initial reserve.
Julian Cook, SkyCity’s executive chair, acknowledged the pivotal role the casino plays in combatting money laundering and terrorism financing. “We acknowledge that, as a casino operator, we play a key role in combatting money laundering and terrorism financing and safeguarding the community against these risks. While we take this responsibility seriously, we accept we have failed to live up to the standard required of us and for this, on behalf of the SkyCity and SkyCity Adelaide boards, and management teams, I apologize,” said Cook.
He continued, emphasizing the company’s commitment to improving its practices. “We know we need to do better to meet the expectations of our regulators, customers, and our shareholders. This is a process that is already underway.”
Austrac CEO Brendan Thomas also commented on the situation, highlighting the case as a crucial reminder for the entire gaming sector. “Austrac took this action out of concern that SkyCity’s conduct meant that a range of high-risk practices, behaviors, and customer relationships were allowed to continue unchecked for many years,” Thomas stated, underscoring the message that AML/CTF obligations should be taken seriously to mitigate risks.
In response to the issues, SkyCity has made significant strides to address the deficiencies at its Adelaide casino.
. An independent expert was appointed in July 2021 to review SkyCity Adelaide’s AML/CTF program and identify areas needing improvement, leading to several substantial changes at the venue.
These efforts culminated in a comprehensive AML enhancement program tailored to rectify the failings identified in the initial case. Furthermore, SkyCity Adelaide has implemented numerous governance changes, expanded its financial crime, legal, and compliance teams, and made new investments in internal AML and CTF resources and capabilities. Strengthening relationships with law enforcement agencies has also been a vital part of their corrective strategy.
“Our enhancement activities remain ongoing,” Cook stated. “We have further important work to do in New Zealand and Australia, which will take time to complete. We remain committed to ensuring that we provide safe and responsible experiences and environments for our people and customers. SkyCity will continue to engage cooperatively and constructively with regulators.”
SkyCity’s compliance challenges are not confined to Australia. In February, it was confirmed that the casino operator would face civil penalty proceedings in New Zealand as well. The country’s Department of Internal Affairs is filing charges against SkyCity and its subsidiary, SkyCity Casino Management Limited (SCML), for alleged non-compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. If the claims are upheld, SCML could incur penalties up to NZ$8.0m.
Draft pleadings detail five significant compliance issues related to the New Zealand Act, with some previously self-reported by SkyCity.
In addition to these legal and compliance challenges, SkyCity has recently undergone several changes to its senior management team. Notably, experienced gambling executive Jason Walbridge has been announced as the new CEO, set to begin his role in July, replacing Michael Ahearne. Julie Amey, the chief financial officer, has also resigned but will continue her duties until 25 September. Additionally, Andrew McPherson has been appointed full-time as the chief information officer after serving in an interim capacity since November.
SkyCity’s board and management remain committed to improving their regulatory compliance and aiming for higher standards to meet the expectations from both regulators and their patrons.
