Sky City has conceded it faces what could be a "material" penalty. Photo: RNZ / Marika Khabazi
Investment analysts are picking casino company Sky City Entertainment may be hit with penalties of about AU$50 million ($53m) if breaches of Australia's money laundering rules are proven.
Australia's financial sector watchdog AUSTRAC has started civil proceedings for penalties against Sky City for [https://www.rnz.co.nz/news/business/480254/skycity-faces-civil-penalty-proceedings-over-alleged-breaches-at-adelaide-casino
alleged breaches of that country's anti-money laundering] and counter-terrorism financing laws by its Adelaide casino.
Local investment houses Forsyth Barr and Jarden Securities have both put a price tag of about A$50m on the possible level of fines, based on similar penalties imposed for similar breaches by other gaming companies and banks.
"The prospect of SKC incurring a financial penalty is now reasonably high, given the alleged level of wrongdoing and the penalties previously applied by the Federal Court following AUSTRAC initiated civil penalty orders," Forsyth Barr said in a research note.
It estimated a penalty range of between A$40m ($42m) and A$60m.
"The nature of alleged wrongdoing at SkyCity Adelaide appears significantly less bad, relative to AUSTRAC's findings for both Crown and Star (casino operators)."
In response to the AUSTRAC filing Sky City conceded that it faced what could be a "material" penalty.
However, Forsyth Barr did not see it is so, saying it was immaterial compared to the overall value of the Sky City Group.
Jarden Securities' analysts also looked at comparable Australian cases involving Tabcorp, Crown, and Star, coming to a similar penalty of around A$50m.
"Based on our TAH (Tabcorp) analysis, we are comfortable assuming a A$50m fine for Adelaide and highlight a negotiated outcome potentially led by CWN (Crown) and SGR (Star) processes could yield a lower outcome for Sky City."
Dirty money
Austrac has identified 124 cases of failing to do due diligence on gamblers, 59 instances of customers posing high risks in terms of the money laundering laws, and 65 customers allowed to channel money through accounts with Sky City.
The Austrac filing https://www.austrac.gov.au/sites/default/files/2022-12/Statement%20of%20Claim%20-%20AUSTRAC%20v%20SkyCity_0.pdf claimed as much as A$4 billion may have been laundered through the Adelaide casino since 2016, with large amounts of notes being used, sometimes in dirty condition, in envelopes and plastic bangs.
It alleged the Adelaide casino failed to do the necessary checks on gamblers involved, some of whom has been charged with money laundering offences, as well as allowing the operators of organised gambling visits - known as junkets - to use accounts with the Sky City group to funnel money in and out of Australia with minimal oversight.
Austrac's claim said New Zealand based SkyCity executives had been aware of the concerns surrounding some gamblers.
SkyCity abruptly ended all links with junket operators last year, but did not specify the reasons.
Meanwhile, the Forsyth Barr report said the Adelaide casino faced further investigation from the South Australian state government consumer and business services agency (CBS), which regulates the gaming sector.
"The scope of the CBS review is concerned with the continued suitability of SkyCity Adelaide to hold the casino licence in South Australia - as well as the ongoing suitability of SKC to be a close associate of SkyCity Adelaide - therefore is more focussed on current processes and behaviour."
Jardens said there was also a risk of "contagion" that the Australian action might prompt New Zealand's regulator looks to undertake a similar review for SkyCity's domestic properties.