SkyCity Faces Fine of Tens of Millions over AML Failures at Adelaide Casino
The Federal Court of Australia has sanctioned an agreement between SkyCity Entertainment Group and the Australian Transaction Reports and Analysis Centre (AUSTRAC) to settle civil penalty proceedings.
Federal Court of Australia reaches an agreement with SkyCity.
LISTEN TO THIS ARTICLE:Last month, SkyCity agreed to pay a civil penalty of AU$67 million due to past shortcomings in anti-money laundering (AML) and counter-terrorism financing (CTF) measures at its Adelaide casino.
Both SkyCity and AUSTRAC made separate submissions for approval at a hearing on 7 June. The court endorsed the agreed penalty and ordered SkyCity to cover AUSTRAC’s costs of $3 million.
Peter Soros, acting CEO of AUSTRAC, praised the decision, emphasizing that businesses, including casinos, must adhere to AML regulations.
Criminals will always seek to exploit the gambling sector to launder their dirty money. Weak AML systems and controls in casinos and other gambling entities make them vulnerable to criminal activities. Today’s outcome shows AUSTRAC’s commitment to act against businesses that neglect their obligations, thereby protecting the Australian community from criminal activity. Money laundering is not a victimless crime. It occurs because criminals attempt to legitimize their illicit earnings from activities such as drug or human trafficking, which are then reinvested to expand their criminal operations.
The Failings Found at SkyCity
The penalty is linked to a case disclosed in December 2022, when AUSTRAC stated that SkyCity Adelaide had shown “serious and systemic non-compliance” with national AML and CTF laws.
However, the case dates back several years before AUSTRAC took action. An industry-wide compliance review started in September 2019, with SkyCity being informed of the alleged violations in June 2021.
One of the main problems was SkyCity’s AML/CTF Programs failing to meet the standards of the AML/CTF Act. AUSTRAC also found that the group did not perform adequate ongoing customer due diligence.
Prolonged non-compliance enabled high-risk customers to channel large amounts through the casino, making the source and ownership of funds obscure.
It was also found that SkyCity offered services through high-risk channels and to high-risk customers without appropriate risk-based controls. AUSTRAC found that SkyCity did not perform necessary checks on 121 customers, including those of interest to law enforcement or with indications of higher money laundering risks.
In response, SkyCity acknowledged its breaches and its vulnerability to criminal exploitation. The company also recognized the risks posed to the Australian community and financial system.
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SkyCity’s Remedial Actions
Since AUSTRAC highlighted the issues, SkyCity has been addressing the problems with ongoing remediation efforts. SkyCity has hired an independent expert to examine its AML/CTF program at the Adelaide casino and other operations to identify areas needing improvement. This review began in July 2021 and has prompted significant changes.
Following this, SkyCity developed an AML enhancement program for the Adelaide casino, addressing the initial case’s identified shortcomings.
SkyCity Adelaide has implemented numerous governance changes and expanded its financial crime, legal, and compliance teams. Additionally, the group has agreed to increased investment in internal AML and CTF resources and capabilities and has improved its relationships with law enforcement agencies.
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