Australian gaming company SkyCity Entertainment Group disclosed it reserved 45 million Australian dollars (U.S. $29 million) for a potential settlement resolving alleged violations of the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) law.

SkyCity, which operates five casinos in Australia and New Zealand, said in a notice Monday the monetary provision was booked for potential civil penalties levied by Australia’s financial regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC). The company acknowledged the penalty could be “significantly higher or lower than the provision” and said it was unsure of timing on a resolution.

The details: In December, AUSTRAC announced its federal court proceeding against SkyCity Adelaide following an investigation into the casino commenced in June 2021.

“AUSTRAC’s investigation identified a range of circumstances where SkyCity failed to carry out appropriate ongoing customer due diligence,” said Peter Soros, AUSTRAC deputy chief executive, in the release. “SkyCity also failed to develop and maintain a compliant [AML/CFT] program, leaving it at risk of criminal exploitation.”

Other violations alleged included failure to appropriately assess AML/CFT risks, respond to changing risks over time, and establish an appropriate framework for oversight of AML/CFT programs.

The company did not have appropriate risk-based systems and controls to mitigate and manage risks, a transaction monitoring program to identify suspicious activity, and an appropriate enhanced customer due diligence program on a range of customers who presented higher money laundering risks, AUSTRAC alleged.

Compliance considerations: SkyCity noted in an investor presentation in February it has taken a number of steps to shore up its compliance with AML/CFT regulations, including:

  • Conducting an enterprise-wide AML/CFT risk assessment;
  • Designing new AML/CFT standards, procedures, and risk appetite approved by the board;
  • Risk awareness training and heightened communication;
  • More detailed process reviews in investigations, customer due diligence, and transaction monitoring; and
  • Implementation of systems upgrades for refinement of transaction monitoring, workflow management, and future automation.

The company said it has 80 dedicated compliance people in financial crime.

SkyCity did not provide further comment.

AUSTRAC began an industry-wide compliance crackdown on casinos in September 2019. In May, Crown Resorts agreed to pay AUS$450 million (then-U.S. $292 million) as part of a settlement addressing alleged AML/CFT lapses.