SkyCity vs. New Zealand DIA Settled

SkyCity Entertainment Group has had many issues in the past, most of which we have covered in our news blog here. Just a couple weeks ago, we were talking about how SkyCity pushed the limits using loopholes in online gambling.

There seems to be light at the end of the tunnel for SkyCity Entertainment Group in New Zealand, after the Department of Internal Affairs (DIA) of the country arrived at a settlement with it that would facilitate resolution of the civil penalty proceedings for ‘alleged non-compliance’ with and breach of the country’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act of 2009.

The settlement will involve SkyCity Entertainment Group paying a penalty—supposedly $4.16 million—for breaching the rules and statutes set in the Act. It would also require the company to officially admit to breaching the obligations laid down under the Act.

SkyCity Agrees to Settlement Terms with the DIA

Earlier this year, the Department filed civil proceedings against SkyCity and its subsidiary, SkyCity Casino Management Limited (SCML) for breach of obligations within the Act. SCML is the entity with the company’s casino operator license in three locations in the country – Auckland, Queenstown and Hamilton.

SkyCity has maintained that these issues were more in reference to historical matters than actual and intentional terrorism financing or money laundering. It said that it had reported some of these actions to the DIA voluntarily, on its own. However, as part of the settlement they will now have to admit to them all.

The DIA’s statement said the involved parties would now recommend moving the proceedings along to the next step in the process, a penalty hearing. The purpose of this hearing would be to put together a penalty amount. The DIA’s statement further stated that the involved parties have agreed on a number - $4.16 million – as the penalty. The court would have the final say on the penalty amount.

DIA Files Civil Proceedings against SkyCity in New Zealand

The DIA filed the proceedings in February 2024 after a detailed investigation and review between September 2022 and December 2023. There were 5 separate clauses of action, laid out by the DIA in the civil proceedings, which were considered significant compliance issues that the company and its subsidiary had failed to address:

Risk assessment
Presence of an AML/CFT compliance program
Monitoring of accounts and transactions
Conducting compliant enhanced customer due diligence
Terminating existing business relationships if they were in breach

The DIA said that the breaches in these areas occurred between a longer period – from February 2018 to March 2023. The DIA also said that while SkyCity was found to be in breach on multiple grounds as listed earlier, there was no evidence to suggest that the company or its casinos were involved in money laundering or providing finance for terrorism-related activities directly at any point.

Mike Stone, the Director of the AML/CFT Group DIA, said, “This agreement is an impactful outcome. We have achieved our desired result without the extended duration and cost of court proceeding … While we consider these regulatory breaches to be serious, we are pleased that SkyCity was able to admit to the breaches and acknowledged responsibility for what were significant failings.”

He said the DIA was pleased to see the efforts that SkyCity had put in to upgrade its performance in the aforementioned areas. These efforts included, among other things:

Bringing new members to the SkyCity board
Hiring directors with specialist-level experience in risk assessment, including a group chief risk officer
Establishing a dedicated committee to monitor risk and compliance

He also lauded them for their public commitment to continue their efforts to achieve improvements.

SkyCity Offers Apology and Outlines Initiatives to Improve Risk Compliance

Speaking about the situation, Executive Chair of SkyCity Julian Cook said ‘regulators were rightly holding SkyCity accountable as it had been the subject of regulatory enforcement action in both New Zealand and Australia.’

He said that SkyCity were disappointed with their situation and took the breaches seriously, which had occurred despite the company making significant progress in upgrading its AML/CFT systems. SkyCity had fallen short of their own standards and failed to meet the expectations of not just the regulators but also the customers and shareholders, he said. He accepted these failings and also apologized for them.

SkyCity Makes Settlement in Australia Non-Compliance Case As Well

The New Zealand settlement is not the only one SkyCity has had to make in recent times. Just a few days prior to it, the company had also announced that it had made a similar settlement in Australia. An agreement arrived at with the Australian Transaction Reports and Analysis Centre (Austrac) will see SkyCity pay out a whopping AU$67 million over historical AML/CFT failures.

Australia had seen an industry-wide compliance campaign being launched back in September 2019. SkyCity was found to have shown a serious and systemic pattern of non-compliance – the player identified was SkyCity Adelaide – and was notified about it in June 2021. The concerns that were raised included:

Inability to appropriately assess risks relating to money laundering and financing of terrorism
Lack of risk-based systems and controls in its AML/CFT programs
Lack of proper framework for senior staff oversight – including board members – for AML/CFT issues

SkyCity had accepted the Austrac findings and actually parked a sum of $45 million towards payment as penalty; the final sum, however, has turned out to be considerably more.