"Serious and systemic non-compliance" with the country's anti-money laundering (AML) and counter-terrorist financing (CTF) regulations was shown by the land-based casino operator, according to AUSTRAC.

Investigations against the New Zealand-based company were brought to SkyCity's attention in June 2021, and the subsequent civil penalty actions are now underway. The investigation followed a compliance drive that began in the sector in September 2019.

Non-compliance with AMLD/CTF regulations was the target of an industry-wide crackdown in September 2019 by AUSTRAC.
The business has noticed numerous institutional shortcomings in its handling of its AML/CTF responsibilities, according to the agency's deputy chief executive officer Peter Soros.

He explained that according to Austrac's assessment, there were several instances where SkyCity did not perform adequate continuous due diligence on their customers. "SkyCity was vulnerable to criminal exploitation because it did not establish and sustain a compliant AML/CTF program."

SkyCity acknowledged the situation but declined to comment further than to summarise the prosecution's case.

"The company does not feel it is appropriate to comment further on the allegations at this stage, given that the matter will be before the court."

Failures in AML and CTF
Austrac claimed that SkyCity had misjudged the dangers of money laundering and the funding of terrorism. The operator failed to set up an adequate structure for the supervision of these initiatives by the board and senior management, and it failed to incorporate risk-based systems and controls into its anti-money laundering and counter-terrorism financing programs.

As for SkyCity's lack of 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," it was determined that the company had none.

Furthermore, according to Austrac, SkyCity did not have a "suitable enhanced customer due diligence program to carry out additional checks on higher risk customers."

The listed shortcomings, according to Soros, made the company susceptible to criminal exploitation.

"All businesses regulated by Austrac should take the requirement for regulated entities to have appropriate AML/CTF controls and systems in place seriously," he said.

Austrac is committed to assisting SkyCity in meeting its current and future AML/CTF Act duties, and it is working closely with the company to do so.

It should be a reminder 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. This is the third civil penalty proceeding that Austrac has launched against enterprises operating in the gaming sector.

Stricter enforcement of Austrac
The financial intelligence agency has taken enforcement action against several gaming operators with an Australian focus, the most recent of which being SkyCity.

Austrac began civil proceedings against Crown Resorts, a casino operator, in March for anti-money-laundering (AML) failures. The federal court proceedings against Star Entertainment Group were also initiated by the agency in November. These cases have not been resolved just yet.

After being implicated in several anti-money laundering and social responsibility failures, both land-based operators were the targets of separate parliamentary enquiries.

The enforcement probe was initiated in September following a "extensive supervisory campaign" into Entain's operations, with the agency referencing AML and CTF concerns.