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Rogue casinos to face penalties of up to AUD 75 million

Rogue casinos to face penalties of up to AUD 75 million South Australia is revamping its casino regulations after a major operator was accused of “serious...

South Australia is revamping its casino regulations after a major operator was accused of “serious and systemic non-compliance”.

South Australia’s government has proposed a major overhaul of casino regulations, with the potential to impose much harsher penalties on operators for breaches of anti-money laundering and counter-terrorism financing (AML/CTF) laws. The move comes in response to a recent enforcement action by the Australian Transaction Reports and Analysis Centre (AUSTRAC) against SkyCity Adelaide, the state’s sole casino licence holder. The proposed legislation would dramatically increase the maximum fine for casino misconduct from AUD 100,000 to a staggering AUD 75 million. Importantly, these penalties would apply not only to future transgressions but also to past conduct, with the government pointing out that the Liquor and Gambling Commissioner would consider any court-imposed penalties when determining additional fines.

This latest legislative push follows a December 2022 civil action launched by AUSTRAC against SkyCity Adelaide, in which the financial intelligence agency’s investigation revealed “serious and systemic non-compliance” with AML/CTF regulations, leaving the casino vulnerable to criminal activity, according to Peter Soros, AUSTRAC’s deputy CEO who, stressing the importance of the proposed new regulations, said in a statement: “This is the third civil penalty proceeding AUSTRAC has brought against businesses operating in the casino sector. It should serve as a warning to casinos and all other businesses regulated by AUSTRAC to take their AML/CTF obligations seriously and comply with the AML/CTF Act and AML/CTF rules.”

The SkyCity investigation, which stemmed from a broader industry-wide probe initiated in 2019, identified a series of failures by the gambling company, including inadequate customer due diligence, particularly for big-stakes high-rollers. In its 2022 lawsuit, AUSTRAC claimed that SkyCity failed to identify and verify the sources of wealth for 59 individuals who gambled very large sums, some of whom were reportedly linked to organised crime. AUSTRAC claimed that SkyCity profited from these patrons to the tune of AUD 74 million, with the agency further alleging that some gamblers used cash that appeared to have been deliberately hidden, suggesting attempts to circumvent reporting requirements.

In February this year SkyCity and AUSTRAC reportedly reached an agreement regarding penalty and admissions and, while AUSTRAC is yet to release further details of the agreement, the fact that an accommodation appears to have been reached suggests that SkyCity is prepared to acknowledge at least some serious breaches of AML/CTF laws, for which they are likely to face a substantial penalty, the amount of which will be determined by a court in June. However, it is a matter of public record that the company has increased the amount set aside to cover any penalty from AUD 45 million to AUD 73 million and, in a statement to the Australian Stock Exchange, it confirmed that it had “come to an agreement” with AUSTRAC and would “admit in the proceedings and the amount of a civil penalty they will jointly propose as appropriate in the circumstances”.

Commenting on the latest proposals, South Australia’s Minister for Consumer and Business Affairs Andrea Michaels stressed the seriousness of the situation: “The state’s casino licence comes with a range of significant responsibilities,” she said. “Given many of the penalties for non-compliance have not been changed in more than 25 years, now is the right time to modernise these laws and ensure our penalties reflect their serious nature.” Michaels further argued that the current penalties are insufficient, stating: “The penalties available to business operators cannot just be a slap on the wrist – or something that a multi-million-dollar business can simply disregard as an acceptable cost of doing business.”

While the new proposals have been broadly welcomed by South Australia’s lawmakers, some would like to see them go further. Independent MP Frank Pangallo, who has long been on the record as calling for a Royal Commission to initiate an inquiry into SkyCity Adelaide, said in a press statement that the proposed penalty changes were “better late than never” but that the government should also establish an independent gambling regulator. “It’s a privilege to hold a casino licence in South Australia… but SkyCity has lost that privilege and should be stripped of that privilege,” he said

The proposed reforms extend beyond increased fines for casino operators. The maximum penalties for other, associated criminal offences will also be subject to an increase, including failing to maintain proper financial records, evading casino duty payments, and disregarding compliance notices issued by the Liquor and Gambling Commissioner.

 

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