Adelaide casino operator SkyCity Entertainment Group has increased the amount of cash it is reserving to pay a likely penalty for breaches of anti-money laundering (AML) legislation from A$45m to A$73m (US$48m), following a general agreement with the federal regulator before Federal Court.
New Zealand-based, Australia-listed SkyCity and money laundering watchdog AUSTRAC have all but agreed on a financial penalty and the details of “serious breaches”, which the court will need to approve, according to a bourse filing on Thursday (February 1).
“SkyCity Adelaide and AUSTRAC have jointly informed the Court that the parties have come to an agreement in relation to the contraventions [of the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006] that SkyCity Adelaide will admit [to] in the proceedings and the amount of a civil penalty they will jointly propose,” the filing said.
A final “statement of agreed facts and admissions” will be submitted to the court prior to a June 7 hearing, it said. The case is expected to be closed before the end of June.
SkyCity and AUSTRAC declined to disclose the proposed fine, but the revised A$73m provision points to a substantial increase, plus legal fees. The provision apparently assumes the court will not impose a further material increase to the penalty.
AUSTRAC confirmed to Vixio GamblingCompliance on Friday that the parties have reached an “in principle agreement on an appropriate penalty and some key admissions”.
“The Court has set down a timetable to allow the parties to seek to finalise an agreement,” it said.
“If an agreement is finalised, it is a matter for the Federal Court to determine the appropriate penalty in the proceedings.”
AUSTRAC launched civil proceedings against SkyCity in December 2022 amid a wider, severe crackdown on land-based casino operators.
The regulator accused SkyCity of not taking AML risk seriously, alleging a failure to assess risks and their impacts, omitting risk-based systems and controls, ignoring the need for board and management oversight, displaying a lack of transaction monitoring and spurning customer due diligence in proportion to risk level.
The number of SkyCity’s alleged breaches and maximum penalty per breach pointed to a potential billion-dollar fine, although the final penalty will fall well short.
A South Australia state government review into SkyCity’s casino licence, mirroring reviews of Crown and Star by other state governments, is on hold until the AUSTRAC case is resolved.
“Allegations raised in the AUSTRAC proceedings, as well as preliminary matters raised by [review head Brian Martin] have been put to SkyCity while the Liquor and Gambling Commissioner [Dini Soulio] considers his options regarding potential action,” the state attorney general’s department says on its website.
Last August, Soulio appointed the Kroll Australia consultancy as independent monitor of SkyCity Adelaide’s compliance practices and other initiatives to meet AML and counter-terrorism financing obligations.
Two months later, SkyCity group CEO Michael Ahearne announced his resignation after three years in the post, effective at the end of March 2024. A replacement has yet to be named.