SkyCity Entertainment Group has been cleared to retain its land-based casino licence in Adelaide. This comes following a report published by South Australia’s gambling regulator ruling the operator had implemented adequate improvements to its anti-money laundering (AML) and counter-terrorism financing (CTF) processes.
An independent review led by retired Supreme Court Justice Brian Martin acknowledged the mistakes SkyCity Adelaide made in the past. However, the report said changes to its systems have allayed many of its concerns.
The report did note that SkyCity must further improve its processes related to AML and CTF. But the operator’s immediate future in Adelaide has been secured with confirmation that it can keep hold of the licence.
The case dates to September 2019, when an industry-wide compliance campaign was launched in Australia. SkyCity was notified of alleged wrongdoing in June 2021, while an investigation, led by Martin, began soon after.
Following this, the Australian Transaction Reports and Analysis Centre (AUSTRAC) launched federal court proceedings against SkyCity Adelaide for AML failings in December of 2022. Martin continued his independent review of the operator and this week the report was published in full.
“If I’d been asked to determine suitability of the licensee and SCEG (SkyCity Entertainment Group) at the end of October 2021, the inevitable answer would have been that neither were suitable,” Martin said. “Since then, the situation has changed.
“The significance of past failures needs to be considered in the context of the licensee’s subsequent behaviour, changes in personnel and the licensee’s current corporate culture and governance.
“I am satisfied that, today, the licensee is a suitable person to hold the licence and operate the casino.”
What did SkyCity Adelaide do wrong?
Setting out its initial concerns over the casino, AUSTRAC said SkyCity Adelaide demonstrated a pattern of “serious and systemic non-compliance” with AML and CTF laws.
This included not having risk-based systems and controls in its AML and CTF programmes. It also failed to establish a proper framework for board and senior management oversight for these projects.
Other issues included not creating a monitoring programme for transactions and to identify suspicious activity that was appropriate to the nature, size and complexity of SkyCity. In addition, AUSTRAC said SkyCity lacked an “appropriate enhanced customer due diligence programme” for additional checks on higher risk customers.
In May 2024, SkyCity settled its initial case with AUSTRAC with the operator agreeing to pay a penalty of AU$67 million (US$44 million). It had set aside $45 million in anticipation of a civil penalty over the matter, but the final amount was substantially higher.
Will SkyCity be ready for 2027 remediation?
As for Martin’s findings, these have been set out in a 541-page report. He referenced a “poor and inadequate culture” in the past, but accepted the efforts made to rectify such issues.
According to Martin, this culture, and management’s approach to AML and CTF, did not fully change until April 2024 when Jason Walbridge joined as CEO. Other changes included Julie Amey resigning as CFO and Andrew McPherson joining as chief information officer.
Martin also noted that progress from mid-2024 continues, with remediation set to complete by June 2027. However, he raised doubts as to whether this timeframe is realistic, given the volume of work to carry out.
“Notwithstanding good intentions, experience has demonstrated that the magnitude and complexity of the tasks is such that full remediation by June 2027 will be difficult to achieve,” the report said.
“Although full remediation by June 2027 appears unlikely, the significance of the change in culture and ongoing progress should not be underestimated. Further, there exist strong reasons for concluding that as remediation progresses, the licensee will successfully comply with its primary obligations under the regulatory regime.”
As Martin was satisfied SkyCity is suitable to maintain its licence. As such, the Adelaide casino will remain open for the foreseeable future.
SkyCity committed to further improvements
Responding to the findings, SkyCity’s Walbridge accepted its past failings. He also reiterated the operator’s commitment to continuing to improve and strengthen its systems.
“We fully accept and acknowledge the findings of the report that we did not measure up to the standards required, and we apologise for those failings,” Walbridge said. “We further acknowledge that we still have work to do.
“We’ve made significant enhancements in terms of leadership, resourcing and systems. This includes a commitment to invest $60 million over three years to transform our culture, uplift our financial crime and host responsibility practices.
“Our team has worked hard to rise out standards, better meet obligations and improve how we look after our customers.”
‘No clean bill of health’ for SkyCity
South Australia Liquor and Gambling commissioner Brett Humphrey also commented on the report. He said while SkyCity will retain the licence, he could not rule out further action or measures for the operator.
“I accept Mr Martin’s findings that SkyCity Adelaide is suitable to hold and operate the casino licence and SkyCity Entertainment Group is suitable to be SkyCity Adelaide’s close associate,” he said. “But let me be clear, this is by no means a clean bill of health for SkyCity Adelaide.
“Even though many of the issues raised have either been addressed or are being addressed through a programme of work being supervised by the independent monitor since August 2023, the deficiencies and breaches uncovered are deeply concerning.
“I am considering Mr Martin’s findings as well as ongoing work by Consumer and Business Services to determine what enforcement action I may take in light of these breaches.
“I will also be looking at what measures may be required for the ongoing future operations of the licence,” Humphrey concluded.
Ex-Supreme Court Justice Brian Martin said SkyCity did not make progress in updating its processes until Jason Walbridge took on the CEO role in 2024.