Federal Court of Australia approves €41?million penalty agreement between SkyCity Adelaide, AUSTRAC?

Jenny Ortiz June 11, 2024

Share it :

Federal Court of Australia approves €41?million penalty agreement between SkyCity Adelaide, AUSTRAC?

The Federal Court of Australia has approved a settlement agreement between SkyCity Entertainment Group and the Australian Transaction Reports and Analysis Centre (AUSTRAC), resolving civil penalty proceedings against the casino operator. The court sanctioned SkyCity to pay a civil penalty of AUD67 million (€41 million) due to historical anti-money laundering (AML) and counter-terrorism financing (CTF) failures at its Adelaide casino. Additionally, SkyCity was ordered to cover AUSTRAC’s legal costs, amounting to AUD3 million (€1.8 million).

AUSTRAC’s acting CEO, Peter Soros, emphasised the importance of stringent AML measures, highlighting that inadequate systems can make businesses vulnerable to criminal exploitation. Soros stated, “[The] result shows AUSTRAC is prepared to take action when businesses, including casinos, fail to comply with the legislation.”

Identified failures and compliance issues?

The penalties are linked to issues uncovered in December 2022, revealing SkyCity Adelaide’s “serious and systemic non-compliance” with AML and CTF laws. The problems date back several years and were part of a broader industry compliance campaign initiated in 2019. Key issues included inadequacies in SkyCity’s AML/CTF programs and insufficient customer due diligence, which allowed high-risk customers to move significant sums of money through the casino undetected.

AUSTRAC identified that SkyCity failed to perform necessary checks on 121 customers, some of whom were known to law enforcement or were suspected of money laundering activities. SkyCity admitted these contraventions, acknowledging they had made the casino susceptible to criminal exploitation and exposed both the Australian community and financial systems to risks.

Last month, both SkyCity Adelaide and AUSTRAC jointly proposed a penalty of AUD67 million (€41 million) to the Federal Court of Australia.

Remedial actions taken by SkyCity?

In response to AUSTRAC’s findings, SkyCity has undertaken several measures to address the identified compliance issues. Since July 2021, SkyCity has appointed an independent expert to review its AML/CTF program, leading to significant changes and the development of an AML enhancement program at the Adelaide casino. The operator has made governance changes, expanded its financial crime and compliance teams, and invested in enhancing its AML and CTF capabilities.

Wider implications and additional penalties?

This settlement is the second major civil penalty AUSTRAC has enforced against Australian casinos, following the AUD450 million (€275.5 million) penalty imposed on Crown’s Melbourne and Perth casinos last year for similar breaches. AUSTRAC’s Soros reiterated the agency’s commitment to enforcing compliance, stating their actions serve as a deterrent to other casino operators.

Moreover, SkyCity is also facing penalties in New Zealand. Last month, the operator reached a settlement with New Zealand’s Department of Internal Affairs (DIA) over AML/CFT breaches, agreeing to pay a penalty of NZD4.16 million (€2.3 million), pending court approval.?

Upcoming SiGMA event: SiGMA East Europe 2024, 2 – 4?September. Find all the details?here.?