SkyCity-AUSTRAC A$67m AML/CTF penalty given Federal Court approval

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The Federal Court of Australia has ordered SkyCity Adelaide to pay a A$67m penalty to the Australian Transaction Reports and Analysis Centre for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. 

SkyCity has also been ordered to pay the Australian Government agency’s costs of $3m.

Civil penalty proceedings were commenced by AUSTRAC in December 2022, analysing historical contraventions of the AML/CTF Act during the period of December 7, 2016 to December 14, 2022.

This action stemmed from a compliance campaign initially started by the agency in September 2019.

Last month, SkyCity and AUSTRAC filed joint submissions with the Federal Court, with the operator admitting that it operated in contravention of the AML/CTF Act under two different sections.

  • Section 81 – its AML/CTF Programs did not meet the requirements of the AML/CTF Act and AML/CTF Rules.
  • Section 36 – it did not carry out appropriate ongoing customer due diligence with respect to certain higher-risk customers and customers transacting through higher-risk channels.

The court found that SkyCity’s AML/CTF programs did not meet AML/CTF Act requirements and that appropriate ongoing customer due diligence was not carried out.

Justice Lee agreed with the $67m penalty for SkyCity, which AUSTRAC says “takes into account SkyCity’s cooperation during the investigation and admissions enabling early resolution of the proceedings”.

This is also the second civil penalty the agency has secured against Australian casinos, as last year, the Federal Court ordered Crown Melbourne and Crown Perth to pay a $450m penalty over two years for breaches of the AML/CTF Act.

AUSTRAC stated that SkyCity admitted that its contraventions “made it vulnerable to criminal exploitation, and exposed the Australian community and financial system to money laundering and terrorism financing risk”.

In addition, the operator said that its failure to comply with the AML/CTF Act “allowed high-risk customers to move millions of dollars through the casino, in ways that made the source and ownership of the funds unclear”.

The agency noted that the casino offered “services through high-risk channels and to high-risk customers without appropriate risk-based controls” and failed to carry out required checks on 121 customers, “including where SkyCity knew customers were the subject of law enforcement interest, or where there were indications that some posed a higher risk of money laundering”.

According to AUSTRAC, SkyCity also did not establish an “appropriate framework to ensure adequate board and senior management oversight of its AML/CTF programs”.

The agency added that SkyCity has taken steps to address the issues identified, but the remediation remains ongoing.

Peter Soros, acting CEO of AUSTRAC, commented: “Criminals will always seek to take advantage of the gambling sector to clean their dirty money. If casinos and other gambling entities have weak anti-money laundering systems and controls, they leave themselves vulnerable to criminal exploitation.

“Today’s result shows AUSTRAC is prepared to take action when businesses, including casinos, fail to comply with the legislation. Businesses who ignore their obligations are affecting the Australian community by leaving the door open to criminal activity.

“Money laundering is not a victimless crime. It happens because criminals are trying to clean their dirty money obtained by lucrative illegal activities like trafficking drugs or humans, and it is often reinvested to further criminal enterprises and amplify these harms.”