Australia’s financial crime watchdog AUSTRAC has commenced civil penalty proceedings in the Federal Court against the operator of Adelaide’s casino SkyCity for alleged non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
AUSTRAC’s move follows its investigation into SkyCity Adelaide - operated by SkyCity Entertainment Group (ASX: SKC) - which commenced as part of an industry-wide compliance campaign.
According to AUSTRAC deputy CEO Peter Soros, the investigations into SkyCity had uncovered ‘systemic failures’ on the casino’s behalf in its approach to AML/CTF obligations.
“AUSTRAC’s investigation identified a range of circumstances where SkyCity failed to carry out appropriate ongoing customer due diligence,” Soros said.
“SkyCity also failed to develop and maintain a compliant AML/CTF program, leaving it at risk of criminal exploitation.”
The financial crime watchdog’s allegations are extensive and include that SkyCity:
- Failed to appropriately assess the money laundering and terrorism financing risks it faced, including the likelihood and impact of those risks, and to identify and respond to changes in risk over time.
- Did not include in its AML/CTF programs appropriate risk-based systems and controls to mitigate and manage the risks to which SkyCity was reasonably exposed.
- Failed to establish an appropriate framework for board and senior management oversight of the AML/CTF programs.
- Did not have a transaction monitoring program to monitor transactions and identify suspicious activity that was appropriately risk-based or appropriate to the nature, size and complexity of SkyCity.
- Did not have an appropriate enhanced customer due diligence program to carry out additional checks on higher risk customers.
- Did not conduct appropriate ongoing customer due diligence on a range of customers who presented higher money laundering risks.
Soros said SkyCity’s approach to its AML/CTF program was ‘ineffective’ and left the casino operator vulnerable to criminal exploitation.
“The requirement for regulated entities to have appropriate AML/CTF controls and systems in place is not optional and should be taken seriously by all businesses regulated by AUSTRAC,” Soros said.
“AUSTRAC continues to work with SkyCity to ensure it complies with its obligations under the AML/CTF Act and to ensure it continues to meet its obligations in the future.
“This is the third civil penalty proceeding AUSTRAC has brought against businesses operating in the casino sector, It should serve as a warning to casinos and all other businesses regulated by AUSTRAC to take their AML/CTF obligations seriously and comply with the AML/CTF Act and AML/CTF Rules.”
SkyCity Entertainment Group said it would be giving the allegations careful consideration before responding.
“SkyCity Adelaide places the utmost importance on compliance with its regulatory obligations including its anti-money laundering compliance and will give the allegations in the AUSTRAC claim, once received, careful consideration before responding,” SkyCity Entertainment Group said.
“In the event AUSTRAC’s claim was to be accepted in whole or in part by the Federal Court of Australia, SkyCity Adelaide may be subject to a civil penalty imposed by the Court which may be material.
“SkyCity understands that AUSTRAC has not yet identified the level of penalty it intends to seek.”
AUSTRAC’s action against SkyCity Adelaide follows the widely publicised inquiries into casino operators on Australia’s east coast: Crown Resorts and Star Entertainment Group (ASX: SGR).
Both public inquiries led to significant penalties and punishments for the casino operators, with Crown forced to delay the opening of its casino in its brand new Barangaroo tower as it awaited conditional approval of its New South Wales gambling licence.
AUSTRAC took similar enforcement action against Melbourne-based Crown in March this year, alleging non-compliance with AML/CTF laws.
Meanwhile The Star was recently hit with civil penalty proceedings by AUSTRAC which alleged ‘serious and systemic’ failures exposed the group to criminal exploitation.
That came one month after The Star was issued with a $100 million fine by the NSW Independent Casino Commission, and came in the wake of Queensland gaming regulators determining the Brisbane-based company was unsuitable to hold a casino licence.
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