Austrac slams SkyCity ‘failures’, launches court action against Adelaide casino group

The financial crimes regulator claims SkyCity failed to monitor tell-tale signs of money laundering, including soiled notes, in a lawsuit seeking penalties that could top $2.5bn.

The Sol Bar at SkyCity Adelaide. Picture: Meaghan Coles

Austrac has cemented itself as Australia’s most fearsome regulator, seeking penalties from Australia’s third-biggest casino group, SkyCity, that could top $2.5bn over “systemic noncompliance” with anti-money laundering and counter-terrorism financing laws.

Austrac launched legal action against SkyCity in the Federal Court on Wednesday, alleging that criminals laundered almost $4bn at the casino group in the past six years. The regulator has earlier filed lawsuits against Crown Resorts and Star Entertainment over similar breaches.

In a statement of claim totalling 800 pages, Austrac alleges a widespread failure to monitor big-spending customers enabled a range of criminals to launder ill-gotten funds through its Adelaide casino - some of whom brought money into the casino covered in dirt after it appeared to have been buried. “The casino operated by SkyCity is vulnerable to laundering of proceeds from a range of serious and organised crime activities including drug and tobacco offences, tax evasion, tax and welfare fraud and illegal gambling,” the claim says.

It is seeking penalties for 124 alleged breaches over the past six years, each carrying a maximum penalty of between $18m and $22.2m. This means the total fine could top more than $2.5bn.

Austrac identified a rogues gallery of 59 suspicious customers – including sex and human traffickers and other criminals. It said the suspicious customers included foreign nationals – often junket operators and players – as well as Australian citizens.

One of those customers was a farm hand who gambled $4.8m over three and half years, and was not bannedfrom the casino until 10 months after he was jailed for more than eight years for money laundering and heroin trafficking. “Many engaged in large cash transactions and transacted with cash that appeared suspicious including in plastic bags, garbage bags, cash bundled together with rubber bands or irregular straps, cash that was dirty and cash that appeared to have been buried,” the court filing read.

Meanwhile, the casino’s anti-money laundering team was under-resourced and did not receive adequate training, Austrac has alleged, enabling the 59 suspicious customers to turn over more than $4bn at the Adelaide casino, losing around $74m to the house, over the past six years.

The proceedings come after the financial crimes regulator started an enforcement investigation into SkyCity in June 2021.

Austrac deputy chief executive Peter Soros said its investigations into SkyCity found systemic failures in its approach to anti-money laundering and counter-terrorism financing obligations.

“Austrac’s investigation identified a range of circumstances where SkyCity failed to carry out appropriate ongoing customer due diligence. SkyCity also failed to develop and maintain a compliant AML/CTF program, leaving it at risk of criminal exploitation,” he said.

Austrac alleges SkyCity failed to appropriately assess the risks it faced, did not include in its AML/CTF programs appropriate systems and controls to mitigate and manage the risks and did not have a transaction monitoring program to identify suspicious activity. Mr Soros said SkyCity’s ineffective approach “left it vulnerable to criminal exploitation”.

Austrac now has three court actions underway against casino groups, following civil proceedings launched against Star Entertainment last week and against Crown Resorts in May.

SkyCity on Wednesday declined to comment on the allegations. The group said it would be “inappropriate for the company to comment further” given the matter will be before the court.

The gaming operator said it would “continue to co-operate with Austrac more generally” and noted the regulator had not identified the level of penalty it intended to seek.

SkyCity, which operates four casinos across Adelaide and New Zealand, reported a net loss of $NZ33m ($31.4m) for the 2022 financial year, on gaming revenue of $NZ639m.

SkyCity shares fell 2.7 per cent to $2.52 on Wednesday. They are down 16.3 per cent, or 49c, since the December 31.