Australian Court Orders SkyCity to Pay A$67m AML Penalty

Australian Court Orders SkyCity to Pay A$67m AML Penalty

SkyCity, a major player in the Australian casino industry, has been slapped with a hefty A$67m penalty by the Federal Court of Australia. This landmark ruling highlights the severe repercussions of non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) regulations. The significant penalty underscores the importance of rigorous AML/CTF protocols in the gambling sector.

Discover the details behind this substantial fine, the court’s findings on SkyCity’s compliance failures, and the broader implications for the gambling industry in Australia. Understand the critical role of stringent AML/CTF measures in safeguarding the financial system from criminal exploitation.

Learn how this case could shape future regulatory practices and what it means for the industry’s commitment to integrity and compliance. Find out how other businesses can avoid similar pitfalls and ensure robust AML/CTF frameworks.

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Australian Court Orders SkyCity to Pay A$67m AML Penalty

In a significant ruling, the Federal Court of Australia has ordered SkyCity to pay a substantial A$67m (€41m) penalty for failings in its anti-money laundering (AML) and counter-terrorism financing (CTF) programs at its Adelaide casino. This decision comes after AUSTRAC, the country’s AML watchdog, launched civil proceedings against SkyCity in November 2022, citing multiple breaches of the AML/CTF Act of 2006.

Court Findings on AML/CTF Failures

The court found that SkyCity’s AML programs did not meet the necessary requirements, notably lacking in appropriate ongoing customer due diligence. This failure left the casino vulnerable to criminal exploitation, with high-risk customers moving millions of dollars through its operations without sufficient checks on the source and ownership of the funds.

AUSTRAC CEO Peter Soros commented, “Criminals will always seek to exploit weaknesses in the gambling sector to launder money. When casinos fail to maintain strong AML controls, they leave the door open for criminal activity.”

Breakdown of the Penalty

In addition to the A$67m penalty, SkyCity must also cover AUSTRAC’s legal costs amounting to A$3m. This agreement between SkyCity and AUSTRAC underscores the seriousness of the violations and the need for stringent compliance measures.

AUSTRAC highlighted that SkyCity admitted to its AML violations, acknowledging the increased risk of criminal exploitation and the potential threat to Australia’s financial system. The operator’s failure to comply with AML/CTF regulations over several years allowed high-risk customers to move large sums of money in ways that obscured the funds’ origins.

Specific Compliance Breaches

SkyCity was found to have inadequately monitored 121 customers who exhibited signs of higher money laundering risks or were subject to law enforcement interest. These failures were attributed to insufficient customer due diligence and a lack of an appropriate framework for senior management oversight of AML/CTF programs.

Remediation Efforts and Industry Impact

While SkyCity has initiated steps to address the identified issues, AUSTRAC emphasized that remediation is ongoing. Soros stated, “Money laundering is not a victimless crime. Criminals use these illicit funds to further their illegal activities, amplifying harm to society. Our continued efforts will act as a strong deterrent to any casino operators attempting to shirk their AML/CTF responsibilities.”

Industry Implications

This penalty marks the second major enforcement action by AUSTRAC against an Australian casino operator. Last year, the Federal Court ordered Crown Melbourne and Crown Perth to pay A$450m for numerous breaches of the AML/CTF Act over a two-year period. These cases highlight AUSTRAC’s commitment to enforcing compliance and the severe consequences of failing to meet AML/CTF obligations.

The regulator acknowledged SkyCity’s cooperation during the investigation, which facilitated an early resolution of the proceedings. This cooperation was factored into the final penalty decision.

Conclusion

SkyCity’s substantial penalty serves as a stark reminder of the critical importance of robust AML/CTF frameworks within the gambling industry. The case underscores the need for continuous improvement in compliance measures to protect financial systems from criminal exploitation. As the industry moves forward, maintaining rigorous standards and proactive oversight will be essential to safeguarding integrity and public trust.

SkyCity Entertainment Group Limited (SKC.NZ) is currently trading at NZD1.50, reflecting a 2.04% increase.