SkyCity Allocates AU$45 Million in Anticipation of Austrac Penalty

SkyCity Entertainment Group, a prominent player in the entertainment industry, has taken significant steps to address anticipated civil penalties stemming from anti-money laundering (AML) non-compliance issues at its SkyCity Adelaide facility in Australia. The company has allocated a substantial provision of AU$45 million (£23 million/€27 million/US$29 million) to tackle these potential penalties and related legal costs.

The Australian Transaction Reports and Analysis Centre (Austrac) initiated federal proceedings against SkyCity in December of the previous year. These proceedings were in response to serious and systemic non-compliance with AML and counter-terrorist financing (CTF) regulations observed at the SkyCity Adelaide venue situated in South Australia.

Each violation cited by Austrac carries a maximum civil penalty range between $18 million and $22.2 million. Despite the ongoing nature of the case for the past eight months, SkyCity has proactively earmarked the AU$45 million provision to cover the expected penalties and associated legal expenses.

Predicting the precise scope of potential penalties remains challenging, as SkyCity underlines that the specific nature and extent of contraventions drive Austrac's determination of penalties. These factors encompass aspects such as the magnitude of the contraventions, incurred losses, remedial measures adopted, and the business's financial position.

SkyCity's statement reads, "The size of any penalty SkyCity Adelaide is exposed to could vary materially from the amount of the provision and significant uncertainties remain. Any eventual civil penalty applied to SkyCity Adelaide in relation to the proceedings may be significantly higher or lower than the provision. The timing of any civil penalty to be paid by SkyCity Adelaide is also uncertain."

Demonstrating its commitment to addressing Austrac's concerns, SkyCity has initiated corrective measures. In May, the Consumer and Business Services (CBS), the regulatory authority of South Australia, ordered the company to conduct an independent review of its AML and CTF programs. This review encompasses the implementation of enhanced programs and the casino's adherence to ongoing AML and gambling harm minimization obligations.

Notably, SkyCity's response to the Austrac case has resulted in the suspension of Hon Brian Martin's review of SkyCity Adelaide's suitability to hold a casino license, pending the outcome of the civil penalty proceedings.

While the exact financial impact remains uncertain, SkyCity's proactive stance in setting aside AU$45 million demonstrates its commitment to addressing regulatory concerns and upholding AML standards. The company's dedication to corrective actions underlines its intention to maintain a compliant and responsible business approach.