SkyCity decides to set aside AU$45m settlement money in AUSTRAC probe

SkyCity Entertainment is preparing to potentially settle with AUSTRAC, the Australian financial watchdog, which launched an investigation into the operator’s Adelaide casino back in December 2022, and is currently investigating what it has described as "systematic non-compliance" with the law that regulates casinos, the Australian Financial Review and other media outlets reported on extensively.

In light of this ongoing investigation, and a recent change in law that allows regulators to issue between AU$18m and AU$22.2m to non-compliant casino operators for each breach they are accused and found guilty of, SkyCity has decided to set aside AU$45m.

SkyCity motivated its decision to allocate this sum to a potential penalty settlement with AUSTRAC in an update on Monday, in which it called the potential exposure to penalties and the lack of clarity as to how big these penalties may be.

AUSTRAC has claimed that SkyCity did not intervene in the case of 59 suspicious patrons who spent AU$4bn with the Adelaide casino, according to AFR figures. According to the regulator, the source of the funds was questionable. SkyCity has already reduced its full-year earnings expectations pending the investigation and its likely outcome.

However, a penalty or a settlement may not be on the cards any time soon. According to the company, the proceedings are at a relatively early stage. Both SkyCity and SkyCityAdelaide on one side and AUSTRAC on the other are attempting to clear up all relevant facts, "before the court identifies a process for any remaining disputed issues and any potential penalty to be determined," the company explained.

As to the specific allegations that SkyCity faces, the most relevant are the ones that have to do with assessing the AML and CTF risks that the property allegedly failed to take into consideration to an extent that corresponds with its obligations.

Another issue AUSTRAC insisted was present at Adelaide’s property was the lack of what the regulator described as a lack of appropriate and ongoing customer due diligence processes. The probe will continue until an outcome has been reached. In the meantime, setting aside money for potential regulatory settlements is not strange at all.

Entain grabbed headlines last week when the company confirmed that it will be allocating £585m to settle an investigation opened against it by HM Revenue & Customs.

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