New Zealand based SkyCity Entertainment Group has finally reached an agreement with AUSTRAC regarding failure to comply with Anti-Money Laundering (AML) laws. The penalty is said to be AU$73 million. Prices for SkyCity shares jumped by over 5%, after uncertainty over the penalty cost was put to an end.
An inquiry into whether SkyCity was fit to hold a casino license in South Australia was put on hold until AUSTRAC could complete their proceedings against SkyCity Adelaide.
Two Competing Inquiries
In July of 2022, the South Australian government’s Liquor and Gambling Commissioner seconded a former Supreme Court Judge to look into SkyCity’s fitness to hold a casino license in the state of South Australia. However, AUSTRAC, Australia’s financial intelligence agency that looks after anti-money laundering measures and counter-terrorism, had already begun an industry-wide campaign beginning in September of 2019.
AUSTRAC had already found dozens of systemic non-compliance issues and notified SkyCity Adelaide of its investigation in June of 2021. The Liquor and Gambling Commission was late to the game in acting upon the vast scope of law-breaking that the Adelaide casino had been doing. Once the AUSTRAC investigation was made known in 2022 to the ex-Judge, Martin, he advised the Liquor and Gambling Commission’s investigation be put on hold until AUSTRAC had completed its proceedings.
From a court document submitted by AUSTRAC:
“Many engaged in large cash transactions and transacted with cash that appeared suspicious including in plastic bags, garbage bags, cash bundled together with rubber bands or irregular straps, cash that was dirty and cash that appeared to have been buried,” the court document states.
By 2019, the money-launderers in South Australia’s SkyCity Casino had become quite bold. Though government-employed monitors in the casino had been reporting dubious behaviour for years, it took some time before the AUSTRAC investigations were able to officially swing into motion.
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Record Time for AUSTRAC
AUSTRAC had received a bad name for running very slow investigations. At the proclamation of the decision to put the Liquor and Gambling Commission’s investigation process on hold, AUSTRAC was publicly questioned in court over the perceived lack of justification for the delay in coming to a decision over the case with Melbourne and Perth Crown Resorts Casinos.
The delays AUSTRAC faced with Crown Resorts were said to be due to lack of agreeance on submitted facts and dates. Their negotiations extended and then, at the time that AUSTRAC’s SkyCity Adelaide investigation began, they faltered. At that time, speculation as to when AUSTRAC would come to a resolution with SkyCity Adelaide varied and was very public. SkyCity’s share holders were anxious that they could not anticipate the cost of remuneration for penalties or when these would be due.
Many were surprised that AUSTRAC came to an agreement with SkyCity Adelaide quickly, after just over a year. Whether ex-Judge Martin will take up his suspended investigation into the Adelaide casino’s fitness to hold a casino license is still unreported.
The Attorney-General made it clear that they had complete faith in Martin’s competency and ability to advise them as to whether his investigation for the Liquor and Gambling Commission would or should be re-started.
“Once the AUSTRAC proceedings have been resolved, the commissioner will then be in a better position to consider when and whether the investigation into the continued suitability of SkyCity Adelaide Pty Ltd to hold the casino licence… should resume.
“The government supports the commissioner’s decision to place the investigation on hold and notes that it was not taken lightly.”
SkyCity Adelaide’s non-compliance with AML/CT was estimated to equate to over AU$4 billion in transactions, between 2016 and 2019. A minimum of $57 million in profit for the Adelaide casino from this was also estimated. Rapid systemic change has occurred regarding the management and operations of SkyCity Adelaide since 2021’s AUSTRAC investigation was first announced. Some believe that this may be enough to counter the need for a separate inquiry into the casino by the Liquor and Gambling Commission to be resumed.
The New Zealand-listed casino may now finally be off the hook. Shareholder confidence certainly agrees with this sentiment going by the 5% jump in share price. SkyCity (SKC) shares have been on a continued downturn since 2021. This uptick in price may see the beginning of a climb back to previous price highs.
