SkyCity faces money laundering proceedings in New Zealand

Casino operator SkyCity is facing another multi-million dollar court battle - this time over allegations of money laundering breaches at its New Zealand venues.

SkyCity Casino in Adelaide. Picture: Russell Millard

Casino operator SkyCity is facing another multi-million dollar court battle - this time over allegations of money laundering breaches at its New Zealand venues.

The company revealed on Monday that the New Zealand Department of Internal Affairs (DIA) intended to file civil proceedings in the High Court against subsidiary SkyCity Casino Management Ltd (SCML) - the operator of the dual-listed group’s Auckland, Hamilton and Queenstown casinos.

SkyCity said the action followed a review of the company’s compliance with the country’s anti-money laundering and counter-terrorism financing laws, and related to “significant compliance issues” that carried a maximum liability to the company of $NZ8m ($7.5m).

The figure is a fraction of the $73m the company has set aside for potential penalties relating to Australian Federal Court proceedings brought against it by financial crimes watchdog AUSTRAC relating to money laundering breaches at its Adelaide casino.

But it adds to the headwinds the company is currently facing on both sides of the Tasman, amid a wider crackdown on casino operators that has already delivered hundreds of millions of dollars worth of fines to major Australian operators including Crown and Star Entertainment.

Earlier this month SkyCity confirmed it had reached an agreement with AUSTRAC that will see it admit to serious breaches under Australia’s anti-money laundering and counter-terrorism finance laws and face a civil penalty.

In a statement to the ASX on Monday, SkyCity said it was “disappointed” with the latest civil proceedings in New Zealand, which were “largely, although not exclusively, historical matters”, and included some breaches which had been self-reported to the department.

It did not disclose whether it intended to defend the claims.

“SkyCity is disappointed that it has not met the standard to which it needs to hold itself, and this has resulted in the action taken by the department,” the company said.

“SCML and SkyCity will engage constructively with the department in relation to the proposed proceedings, with a view to resolving these matters expeditiously.

“SkyCity is committed to continuing to uplift its processes and systems, particularly with respect to AML/CFT and host responsibility matters.”

The civil action to be brought by the DIA comes as the New Zealand Gambling Commission considers a temporary suspension of SkyCity’s licence to operate its casinos in New Zealand over alleged breaches of gambling harm minimisation rules.

The DIA lodged an application with the Gambling Commission in September for a 10-day suspension over allegations it did not comply with its licence requirements.

SkyCity said on Monday that five separate causes of action had been outlined in draft pleadings, ahead of formal proceedings which were due to be filed by the DIA on February 16.

Meanwhile in Australia the company is awaiting a Federal Court penalty for breaches at its Adelaide casino, previously warning the liability could be “significantly different” to the $73m is has set aside in its books.

AUSTRAC had alleged in a lengthy claim that more than $4bn was gambled through the Adelaide casino by 59 suspicious customers over six years.

The claims prompted a South Australian government review into whether SkyCity should retain its licence to operate its Adelaide casino.

An independent expert has been appointed to review and monitor SkyCity’s anti-money laundering programs at the venue.

SkyCity shares slipped 2.8 per cent on Monday’s news, closing the day at $1.92.

Originally published as SkyCity faces money laundering proceedings in New Zealand