Court orders SkyCity to pay $67 million money laundering fine
The Federal Court says SkyCity Adelaide must pay a huge penalty for breaches of anti-money laundering laws at its North Terrace casino.
The Federal Court today found SkyCity Adelaide’s anti-money laundering and counter-terrorism financing (AML/CTF) programs failed to meet the legislation’s requirements, and that it did not carry out “appropriate ongoing customer due diligence”.
SkyCity Adelaide will now pay a $67 million penalty, which was proposed to the court after agreement with the federal financial crimes regulator AUSTRAC.
The operator of Adelaide’s casino admitted that its contraventions of the AML/CTF legislation made it vulnerable to criminal exploitation, and exposed the Australian community and financial system to money laundering.
In a statement, AUSTRAC said SkyCity’s failure to comply with the AML/CTF Act allowed high-risk customers to move millions of dollars through the casino.
Further, the casino operator admitted it failed to carry out required checks on 121 customers, and that it did not establish an appropriate framework to ensure senior management oversight of its AML/CTF programs.
AUSTRAC acting CEO Peter Soros said casinos must take their anti-money laundering obligations seriously.
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“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,” Soros said.
“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.”
SkyCity remains under investigation on a state level, but that inquiry was put on hold while the AUSTRAC investigation was underway. That state investigation will look into whether SkyCity is fit to hold a casino license.
SkyCity takes Treasurer to the High Court
It comes as SkyCity yesterday announced it would take the state Treasurer to the High Court, which could see a $20 million interest payment reduced to $2 million.
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SkyCity told the shareholders in February this year that a legal ruling on the interpretation of how it paid tax to the state government could see it forced to cough up as much as $20 million in backpay to Treasury.
The case, which was decided in the South Australian Court of Appeal, pertained to the interpretation of provisions in the Adelaide Casino Duty Agreement 1999 – specifically relating to the determination of the treatment of loyalty points converted to gaming machine play and the deduction of loyalty points earned for the purpose of calculating casino taxes.
SkyCity announced to the ASX yesterday that the High Court had granted it special leave to appeal the judgement.
SkyCity initially filed a statement of claim in September 2022, followed by the Crown Solicitor’s Office in November 2022 filing a cross-claim which formulated Revenue South Australia’s position on the unpaid duty and interest on top of that.
In February this year, the South Australian Court of Appeal ruled in favour of the state Treasurer’s interpretation of the Casino Duty Agreement, finding that “credits on gaming machines arising from conversion of loyalty points, when played by customers, are to be included in gaming revenue for the purpose of calculating casino duty,” according to SkyCity.
On top of the estimated $13 million of additional casino tax, SkyCity said it could end up paying a further $20 million in penalty interest on unpaid tax.
SkyCity said the High Court would conduct “a full hearing of the appeal from the decision of the Court of Appeal later this year”.
It said the outcome of this decision could either confirm the Court of Appeal’s interpretation of the Casino Agreement, or may adopt SkyCity’s interpretation.
“The question of the applicable interest rate for outstanding duty, and whether the contractual interest provision in the Casino Duty Agreement is enforceable, remains to be determined by a single Judge of the Supreme Court at a later date,” SkyCity said.
SkyCity said if the Supreme Court decided against SkyCity and its appeal to the High Court was unsuccessful, it may be required to pay penalty interest on the additional casino duty, estimated at $22.8 million.
If SkyCity is successful in its appeal, penalty interest may be reduced to an estimated $2.4 million.
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