SkyCity Adelaide has been hit with a substantial $67 million fine by the Federal Court of Australia due to severe lapses in complying with anti-money laundering (AML) and counter-terrorism financing (CTF) laws. This fine follows a civil action initiated by AUSTRAC, Australia’s financial crimes agency, which uncovered extensive misconduct within the casino’s operations.
The Findings and Allegations
The court’s findings revealed that SkyCity Adelaide had consistently failed to conduct proper due diligence on its customers, some of whom were linked to organized crime, loan sharking, human trafficking, and sex slavery. This negligence allowed high-risk individuals to move large sums of money through the casino, obscuring the origins and ownership of these funds. The casino did not perform required checks on 121 customers, despite having knowledge or indications of their involvement in criminal activities.
AUSTRAC’s Statement
An AUSTRAC spokesperson emphasized the gravity of the casino’s failings, stating that SkyCity’s misconduct made it highly susceptible to criminal exploitation, thereby posing significant risks to both the Australian financial system and the community at large. The spokesperson highlighted the broader implications of such failings, noting that Australia’s economy can be exploited by bad actors to launder illicit funds, which in turn causes substantial public harm.
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Financial and Legal Repercussions
In addition to the $67 million fine, SkyCity Adelaide has been ordered to pay $3 million in legal costs. This penalty was part of a joint submission to the Federal Court by SkyCity and AUSTRAC. The casino had previously set aside over $70 million in anticipation of such a penalty, indicating its acknowledgment of the misconduct.
AUSTRAC launched proceedings against SkyCity in December 2022, accusing the casino business of systemic non-compliance with the laws. AUSTRAC alleged SkyCity Adelaide allowed 59 high-risk customers to gamble more than $4 billion in dirty cash through its casino.
In the month of May, they have informed the Court that the parties have come to an agreement in relation to the contraventions that Company will admit in the proceedings and the amount of a civil penalty,
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Broader Context for Casino Industry
The scandal has prompted further scrutiny into SkyCity’s operations. In 2022, South Australia’s Consumer and Business Services department appointed retired Supreme Court judge Brian Martin KC to assess the casino’s suitability to continue its operations. However, this investigation was deferred pending the outcome of AUSTRAC’s legal proceedings.
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Skycity Legal Challenges
SkyCity is also entangled in a separate legal dispute with the South Australian government regarding the taxation of loyalty rewards points. The casino argues that these points should not be considered taxable revenue when converted by customers for gambling purposes. After an unfavorable ruling by the South Australian Supreme Court, SkyCity has secured an appeal to the High Court. If unsuccessful, the casino faces an additional financial burden exceeding $22 million.
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Implications and Future Steps
The substantial fine and ongoing investigations underscore the importance of stringent compliance with AML and CTF laws for casinos and other financial institutions. SkyCity Adelaide’s case serves as a cautionary tale, highlighting the severe consequences of failing to uphold these legal standards. Moving forward, SkyCity will need to implement rigorous measures to rectify its compliance processes and restore its reputation.
