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Australian money laundering watchdog AUSTRAC has taken the Adelaide casino operation of SkyCity Entertainment Group to court in a potentially billion-dollar civil proceeding, the latest in a flurry of AUSTRAC actions against gambling companies.
AUSTRAC alleged in a statement on Wednesday (December 7) that the SkyCity Adelaide casino had engaged in “serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws”.
“AUSTRAC’s investigation identified a range of circumstances where SkyCity failed to carry out appropriate ongoing customer due diligence. SkyCity also failed to develop and maintain a compliant AML/CTF program, leaving it at risk of criminal exploitation,” AUSTRAC deputy CEO Peter Soros said.
New Zealand headquartered SkyCity allegedly failed to “appropriately assess” AML/CTF risks and to “identify and respond to changes in risk over time” at its South Australia state operation, the statement said.
SkyCity Adelaide’s AML/CTF programs lacked appropriate risk-based systems and controls and board oversight, and the company failed to operate a transaction monitoring system, an adequate due diligence program or carry a record of appropriate due diligence checks for higher risk customers, it said.
The litigation follows an enforcement investigation into SkyCity that started no later than June 2021, and after an industry-wide compliance campaign that commenced in September 2019.
The same campaign triggered an enforcement campaign into Sydney and Brisbane casino operator The Star Entertainment Group. AUSTRAC announced it had sued Star Entertainment last week in a similar case that could also amount to billions of dollars in fines.
Many of AUSTRAC’s accusations against SkyCity overlap with those against Star Entertainment, and the former action is also based on “innumerable” breaches of Section 81 of the federal Anti-Money Laundering and Counter-Terrorism Financing Act 2006, according to AUSTRAC’s concise statement to the court. Section 81 requires a properly implemented AML/CTF program.
AUSTRAC alleges that SkyCity also committed 124 breaches of Section 36 of the act, which requires ongoing customer due diligence and AML/CTF risk mitigation, corresponding to 124 specific customers of the company. Each contravention attracts a maximum civil penalty of between A$18m and A$22.2m ($12m-$15m).
The concise statement alleges that, from December 2016, the casino facilitated customer and junket payments to and from offshore accounts controlled by the parent company.
“In the absence of appropriate risk-based controls, these combined risks made SCA [SkyCity Adelaide] vulnerable to criminal exploitation. This is because money could be moved into and out of the casino, and within the casino, in ways that lacked transparency as to the source and ownership of funds,” it said.
It alleges that such services were provided without due diligence on higher risk customers, including some with reported links to organised crime. The company allegedly netted some A$74m in gross gaming revenue from these arrangements, as well as some A$23m from junket arrangements.
As with Star Entertainment, AUSTRAC is suing SkyCity in federal court in New South Wales state.
AUSTRAC’s move against SkyCity is another blow to the battered reputation of Australian gambling companies, and continues a series of lawsuits, enforcement investigations, audits or warnings involving high-profile gaming companies.
These include Crown Resorts, global online giant Entain and corporate bookmakers bet365 and Sportsbet, as well as enhanced probes or warnings for the wider land-based casino segment and the powerful slot machine industry.
