Adelaide’s SkyCity Casino Ordered To Pay $67m Fine Over Money Laundering Case

The operator of Adelaide’s casino has recently been directed to pay a $67 million fine by the Federal Court for failure in a money laundering case filed by the financial crimes agency- AUSTRAC.

The civil action citing SkyCity Adelaide breached the anti-money laundering and counter-terrorism legislation requirements, stated federal sources.

Court filings contained allegations that the casino served customers with connections to human trafficking, organized crime, loan sharking, and slavery.

The court highlights the failure that permitted high-risk customers to transfer millions of dollars through the casino, which made the source of the money as well as ownership unknown.

AUSTRAC Criticizes SkyCity’s Customer ID Practices

On Friday, June 5, 2024, an AUSTRAC spokesperson said that SkyCity did not conduct adequate or ongoing customer identification requirements.

”Australia offers a free and open economy where fraudsters can take advantage of financial operations to clean their money, and the case of money laundering remains a very persistent problem with negative social impacts,” the spokesperson said.

“SkyCity accepted that their violations left the Australian community and financial system open to the possibility of money laundering and terrorism financing, as well as making it susceptible to criminal exploitation,” he added.

Speaking of the deficiencies in the casino’s performance the spokesperson noted that over the years the casino has become a preferred target for high-risk customers to transfer millions of dollars through the casino.

“In a way that obscured the originality of funds as well as its ownership,” they said.

“It did not conduct prescribed checks on 121 customers, where SkyCity knew that some of the clients were the subjects of law enforcement authorities or where there were signs that some of the clients presented a higher likelihood of engaging in money laundering”.

In addition, the company has also been directed to pay $3 million in costs to AUSTRAC.

SkyCity will now ensure that payment is done within fourteen days.

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Peter Soros’s Remarks

AUSTRAC acting chief executive, Peter Soros said casinos, like all other business entities, must oblige to their anti-money laundering regulations seriously.

Mr. Soros added, “In fact, criminals will always exploit the gambling sector to launder their black money.”

“Today’s result highlights that AUSTRAC is willing and able to act where organizations are not adhering to the law even in the gambling industry,” he added.

Companies that disregard their responsibilities are allowing criminal behavior to flourish, which negatively impacts the Australian community.

Justice Michael Lee’s opinion

On Friday, Federal Court Justice Michael Lee said that “the conduct between both parties was comprehensive and the amount of costs to be paid was reasonable as well as recognized and confirmed the costs which were $ 3 million, on the top $ 67 million penalty agreed by the casino in May.”

Justice Lee expressed his dissatisfaction with the evidence presented by AUSTRAC, stating that the regulator should have been able to present an estimated gain from the unlawful actions of the casino.

The judge commented: “That evidence has not been thought appropriate to be brought by the regulator in the case, which would be necessary to conclude a view in a relatively wide, the financial benefit that has been obtained by contravening conduct. ”

SkyCity’s High Court Appeal on Tax Method

AUSTRAC and SkyCity Adelaide announced in May 2024 that they had jointly submitted a request to the Federal Court for a $67 million fine in response to the casino’s violation.

Taking in another legal matter, SkyCity had claimed that the High Court is willing to hear an appeal on the method used by some state governments in the calculation of taxes on loyalty reward points, stated media sources.

Currently, the casino has been in a dispute with the South Australian government about whether the accumulated loyalty points equate to taxable revenue when customers redeem them for usage in playing gaming machines.

A statement to the stock exchange indicated that SkyCity had obtained approval for a High Court appeal against an earlier South Australian Supreme Court ruling.

SkyCity commented that if it fails, the company may be compelled to pay over $22 million.

The amount of penalty interest might be lowered to an estimated $2.4 million if SkyCity is successful in its appeal, stated media sources.

As per Federal court, this is AUSTRAC’s second civil penalty against casinos; the first came when Crown was made to pay a $450 million fine over two years for its casinos in Perth and Melbourne.

On Friday morning, SkyCity informed the stock market that the legal proceedings had concluded.