SkyCity Entertainment Group, the New Zealand-based casino operator, is preparing for the worst. It is facing two investigations linked to its casino in Adelaide, Australia, and is setting aside a significant amount of cash in anticipation of having to pay huge fines.
Australia’s Australian Transaction Reports and Analysis Center (AUSTRAC) and South Australia’s (SA) The Office of the Liquor and Gambling Commissioner (OLGC) are both looking into SkyCity. They are responding to concerns that the Adelaide casino failed to adhere to anti-money laundering (AML) procedures on multiple occasions.
The scrutiny is reminiscent of the still-hot scandals involving Crown Resorts and Star Entertainment. With the record fines both of the casino operators have faced across Australia, SkyCity has an idea of what might be coming.
The Writing’s On The Wall
Glenn Davis, the recently-appointed chairman of SkyCity Adelaide, told shareholders last Friday that the company has been making preparations for the worst. In the event AUSTRAC and the gaming regulator determine that breaches occurred that warrant financial penalties, SkyCity has made sure it has enough liquidity to cover them.
The OLGC launched an informal inquiry this past July. It followed the investigations into Crown and Star, both of which had violated AML policies in New South Wales (NSW), Queensland and other states. The regulator stated recently that it will report the results of the inquiry next February.
AUSTRAC’s investigation has been in play for much longer, beginning in June of last year. It has also been more thorough, with SkyCity Entertainment chair Julian Cook telling shareholders that the financial watchdog has come back nine times to request more documentation.
AUSTRAC conducted a review of the Adelaide casino in 2016, which didn’t find any issues, according to Cook. However, after it began taking a closer look in 2019, it uncovered concerns dating back to that time.
There were other questions about some activity “serious con-compliance” that may have taken place between 2018 and 2019, as well. These concerns made it virtually impossible for SkyCity to make a play for a casino license in NSW when the Crown debacle was coming to a head.
Behind The Eight Ball
One of SkyCity’s shareholders spoke up during the meeting last Friday, accusing company staff of behind “behind the eight ball” in terms of AML compliance. The unidentified investor showed frustration with SkyCity’s apathetic approach toward legislation, instead of proactively ensuring it was playing by the rules.
Cook fielded the question, acknowledging that there were issues and calling the situation “disappointing.” However, he stated that SkyCity is now taking a “singular focus” to address the shortcomings.
Among these responses are the creation of a dedicated compliance team, an increase in staffing for compliance and investments in infrastructure. However, because these developments are reactive and not proactive, there is still the chance that SkyCity will be hit financially by regulators.
Star is out well over AU$100 million (US$62.3 million) over its egregious pattern of policy failures. It isn’t likely that SkyCity would have to pay close to that, but the company’s ready, just in case.
CEO Michael Ahearne said that its “liquidity headroom” is more than three times what the company expects to maintain under normal operating conditions. Only time will tell if it’s enough.
The post SkyCity Entertainment Admits It Could Face Huge Fines Over AML Failings in Australia appeared first on Casino.org.