SkyCity Entertainment Group has increased its provision for a potential civil penalty by Australia’s AML watchdog, AUSTRAC, from AU$45 million to AU$73 million. This adjustment comes after the company reached a settlement agreement with AUSTRAC, following allegations that its Adelaide casino, SkyCity Adelaide, violated the Australian Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act).
Legal Proceedings and Settlement:
The settlement was reached after a case management hearing on Thursday, leading to a court hearing scheduled for June 7, 2024. During this hearing, SkyCity Adelaide is expected to admit to “serious breaches” of the AML/CTF Act. The exact settlement amount was not disclosed by SkyCity, but the provision for the potential civil penalty and associated legal costs has been revised based on discussions with AUSTRAC.
Revised Provision and Uncertainty:
SkyCity revised its provision from AU$45 million to AU$73 million, reflecting an estimate of potential exposure to penalties and legal costs. The company emphasized the uncertainty surrounding the final amount, stating that it remains a matter for the discretion of the Court. The actual civil penalty applied to SkyCity Adelaide may differ significantly from the provision.
Background and Industry Context:
In June 2021, AUSTRAC initiated investigations into major Australian casino operators, including Crown, Star, and SkyCity, for potential breaches of Anti-Money Laundering laws. AUSTRAC launched civil penalty proceedings against all three operators in December 2022. Notably, Crown settled for AU$450 million in July 2022, while proceedings against Star are still ongoing.
Future Implications:
The escalating provision by SkyCity highlights the financial impact of regulatory scrutiny on the gaming industry. The forthcoming court hearing in June 2024 will play a crucial role in determining the final settlement amount. This development underscores the need for casino operators to strengthen their compliance measures to mitigate legal and financial risks associated with Anti-Money Laundering regulations.