Watchdog: Aussie casino missed raft of red flags
Big question on court charges is whether NZ sites will now be probed, says analyst
‘Customer 32” listed his occupation as a truck driver yet he gambled more than A$44 million at Skycity Adelaide. He went there for years between December 2016 and last August, according to charges laid this week in the Australian Federal Court, and the mismatch between his occupation and his gaming turnover should have raised red flags, it’s alleged.
The statement of claim from the Australian Transaction Reports and Analysis Centre said: “At no time was Customer 32’s source of wealth or stated occupation consistent with their gaming activity.
“It was not until August 9, 2021 that Skycity Adelaide issued a ban in respect of Customer 32.”
The truck driver is just one of the dozens of gamblers who went to the riverside casino owned and operated by the Nzx-listed company, alleged to have allowed criminals to launder almost A$4b in the past six years.
Occupations were inconsistent with gambling activities, Austrac said, listing how customers whose occupations didn’t match spending yet were allowed in for years from late 2016:
● Customer 1 was the founder and chairman of Macau-based Suncity, Alvin Chau Cheok-wa, although Austrac didn’t name him. He and junkets he operated at Skycity Adelaide from 2017 to 2020 gambled A$120m, he was arrested and charged last year with money laundering and illegal gambling yet he wasn’t banned from the Adelaide casino till March 22 this year;
● Customer 2 gambled more than A$420m at the casino and was rated as high risk but the casino failed to monitor that person, despite them becoming intoxicated, was banned for 24 hours for that and abusive behaviour towards staff. At one stage had “grabbed a chair in an attempt to strike the other customer”;
● Customer 32 gave their occupation as a truck driver yet recorded a A$44m turnover at Skycity Adelaide. It wasn’t till last August that he was banned;
● Customer 29 gave their occupation as a meat packer, gambled more than A$13.4m but wasn’t banned until March 31, 2021.
● Customer 44 gave their occupation as a grape picker or chef, gambled A$3.5m but wasn’t banned until March 29 this year.
● Customer 46 gave their occupation as a plumber, gambled A$3m but wasn’t banned until March 29 this year.
● Customer 40 gave her occupation as a waitress or a homemaker and gambled more than A$2.8m but wasn’t banned till last November.
● Customer 14’s case was more detailed: Skycity decided in 2019 to stop doing business with this person because an operator of a junket funded by that customer was suing Skycity over disputed costs relating to a jet charter. In February 2020, this customer was arrested in a foreign country for money laundering and corruption offences. Yet it wasn’t till September 2020 that Skycity Adelaide issued a ban on Customer 14.
Austrac said: “There were no appropriate processes to escalate high-risk customers where their occupation, where known, was inconsistent with their gambling”.
The regulator has launched similar civil cases against Crown Resorts and Star Entertainment.
Providing a safe and
responsible environment for our customers and communities is a priority for us.
Michael Ahearne, Skycity chief executive
I n New Zealand, questions are now
being asked about what’s gone on at the casinos Skycity owns and runs in this country — Auckland, Hamilton and Queenstown.
Adrian Allbon, Jarden senior analyst, said the key question after Austrac laid charges on Wednesday was “the magnitude of the . . . fine and also any potential contagion where the NZ regulator looks to undertake a similar review for the NZ properties”.
Allbon said the statement of claim filed showed Skycity faced 124 contraventions for customer due diligence failures: 59 breaches for providing services for customers at high risk of money laundering/terrorism financing (ML/TF) and 65 breaches for facilitating the transfer of money from third parties in and out of Australia via its New Zealand casino accounts, bypassing the traditional banking system and which involved higher ML/TF risks.
Turnover under review was A$4b, including net revenue of A$23m from junkets, he noted.
He has calculated Skycity could be fined around A$50m if it’s found guilty of breaking the law in Australia although Australian media said the maximum fine if all the allegations were proven could be A$2.5b.
In response to Austrac and being sued, Skycity chief executive Michael Ahearne said yesterday: “Providing a safe and responsible environment for our customers and communities is a priority for us.
“We take our anti-money laundering obligations seriously and remain committed to enhancing our processes.
“We will continue to work with all
our regulators on the ongoing enhancements of our anti-money laundering/counter-terrorism financing programmes.”
Skycity is understood to have employed more people and upgraded systems after the probe was launched in Australia last June.
A ustrac said in this week’s statement of claim that Skycity Adelaide was vulnerable to laundering proceeds from a range of serious and organised crime activities including drug and tobacco offences, tax evasion, tax and welfare fraud and illegal gambling because it is a cash-intensive businesses and cash is harder to trace than other forms of wealth.
The statement then went into detail, alleging activities which the casino should have noticed and stopped.
Customers had put cash and gambling chips into items such as envelopes, handbags, satchels, plastic bags, reusable bags, and wrapped jackets
and bundles, or instructed casino employees to do the same.
They had exchanged such cashfilled items with each other, including by passing them under tables, leaving them in open spaces and then signalling each other, and hiding them behind cushions on the couches in private gaming rooms.
They had carried significant amounts of cash and chips into toilets away from the view of surveillance cameras, and sometimes swapped the cash between different carrying items inside the toilets.
Skycity Adelaide (SCA) allegedly allowed customers to spend dirty money that appeared to have been wet, previously buried and smelly.
Some of the 59 customers served from December 7, 2016 were politically exposed persons or those determined to be high risk.
“Many engaged in large cash transactions and transacted with cash that appeared suspicious including in plastic bags, garbage bags, cash bundled together with rubber bands or irregular straps, cash that was dirty and cash that appeared to have been buried”, Austrac’s claim said.
“SCA was aware that some of the customers had been charged or arrested in connection with offences, including dealing with the proceeds of crime and money laundering.
“SCA was aware of information suggesting that some customers were connected to organised crime or that their source of funds or source of wealth may otherwise not be legitimate,” the court claim said.
From December 7, 2016, 65 customers remitted money through a channel that allowed money to be moved in and out of Australia, in circumstances where the casino operator had minimal to no visibility over the source of funds.
Money could be remitted across international borders in an offsetting process bypassing the traditional banking system and involving higher money laundering and terrorism financing risks.
The casino operator allowed transactions totalling over A$44.9m in Australian and foreign currencies for these 65 customers, Austrac said.
Peter Soros, Austrac deputy chief executive, said its investigations identified systemic failures in the casino’s approach to anti-money laundering and counter-terrorism financing obligations.
“Austrac’s investigation identified a range of circumstances where Skycity failed to carry out appropriate ongoing customer due diligence. Skycity also failed to develop and maintain a compliant AML/CTF programme, leaving it at risk of criminal exploitation,” he said.
Skycity shares are trading down 15 per cent annually, falling further after Austrac sued, from Tuesday’s $2.72 to $2.65 on Wednesday.
What happens next remains uncertain. Skycity isn’t saying any more and neither is Austrac.
● Full documents of the proceedings and a public statement are available at www.austrac.gov.au