Dirty money, literally and figuratively, is at the centre of a lawsuit focused on SkyCity Adelaide
Money laundering charges laid against SkyCity in Australia could have implications for its significantly larger operations at home.
Austrac’s charges, laid in the Australian Federal Court, allege billions of dollars were laundered through SkyCity Adelaide in 124 contraventions of the country’s Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CFT).
The allegations involved money that was wet, dirty and appeared to have been buried, was exchanged for chips. Suitcases full of money were taken out of the casino and a patron registered as a truck driver gambled A$44 million (NZ$47m) over five years with no questions about where the money came from.
READ MORE: * SkyCity promises ‘singular focus’ on stamping out money laundering * Online gambling products ‘aggressively’ targeting NZ * Sky City shares fall after revelation of investigation by financial regulator
It also alleged money was able to be transferred between casino accounts, bypassing the banking system and the scrutiny that comes with it.
Each contravention holds a maximum penalty of A$22.2m, a mind-numbing amount for a company worth $2 billion, but the total penalty is extremely unlikely.
Fines previously issued to Tabcorp (the TAB operator in Australia) worked out to about A$417,000 per contravention. Investment company Jarden expects a penalty of about $50m.
Asked whether the allegations would have implications for its New Zealand casino licence, Department of Internal Affairs (DIA) general manager of regulatory services Caroline BridglandHill said any enforcement or recommendation made to the Gambling Commissioner would need to rely on evidence obtained in relation to an NZ Casino licence.
At a glance it seems like Australian troubles will be isolated, but if accusations levelled against its New Zealand operations in the regulator’s statement of claim are proven, it could well come over the Tasman.
Austrac’s claim said SkyCity operated its customer accounts through Horizon Tourism, a wholly owned subsidiary registered in New Zealand which, according to Austrac, presented a “particularly high” money laundering risk.
Horizon Tourism is directed by SkyCity chief executive Michael Ahearne and general counsel Jo Wong.
Labelled “the New Zealand channel”, Horizon's involvement included a customer transferring $1m in winnings from one of SkyCity’s New Zealand venues to another customer’s account. The receiving customer flew from Melbourne to Adelaide, withdrew the funds in cash and returned to Melbourne.
The same customer went on to transfer another $4.7m to the same person's account.
BridglandHill said if any reporting entity were “knowingly enabling” money laundering to occur in the course of its business, it would be in breach of its AML/CFT obligations.
AML obligations also include assessing the risk of money laundering and maintaining a programme to manage and mitigate the activity, as well as customer due diligence and reporting suspicious transactions.
Adelaide relied on SkyCity’s New Zealand head office for elements of its due diligence.
The Department of Internal Affairs kicked off its annual review of SkyCity New Zealand’s Auckland, Hamilton and Queenstown properties in September.
Suitable for licence?
In July, South Australia’s liquor and gambling commissioner Dini Soulio commissioned an investigation into whether SkyCity was still suitable to hold the state's only casino licence.
The review follows similar investigations which saw Star Entertainment being found unfit to operate casino licences in Queensland and New South Wales, and Crown being found unfit to hold licences in New South Wales, Victoria and Western Australia.
SkyCity’s review is slightly different in that the findings will be announced after Austrac filed a court case, while elsewhere Austrac taking legal action had come after negative licensing decisions from state gambling regulators.
Investigator Brian Martin KC is due to report back to Soulio in February.
Investment company Forsyth Barr said Soulio’s review would be more focused on current processes and behaviour than past grievances.
Since the alleged offending took place, SkyCity has stopped dealing with junket operators, upped the size of its AML team and promised to stamp out money laundering on its properties.
However, South Australia’s casino act takes into consideration reputation, business acumen and experience and any other matters the commissioner sees fit when deciding the suitability of the licence holder.
In New Zealand casino licence suitability is controlled by the Gambling Act 2003 and with all rights of renewal exercised, SkyCity Auckland’s licence expires in 2048.
Suitability requirements under the New Zealand act take into account the honesty of the applicant, including previous disciplinary actions.
Being found unsuitable to operate a licence didn’t immediately stop Star Entertainment and Crown from operating but meant they will have to show cause and have special managers or oversight put in place.
They also received hefty fines, such as the A$120m penalty slapped on Crown by the Victorian regulator.
SkyCity wouldn’t comment on Austrac allegations because they are in front of the court but said it had a cooperative relationship with the DIA in its yearly audits.
