‘Dirty’ money was wet, buried: SkyCity’s Adelaide operation sued over billions allegedly laundered

Riverside, SkyCity Adelaide where the company built a huge new hotel. Photo / Supplied

SkyCity Adelaide allegedly allowed customers to spend ‘dirty money’ that appeared to have been wet and previously buried, according to documents lodged in the Federal Court of Australia yesterday.

Customers posing a high money laundering or terrorism financing risk engaged in big-time cash transactions, allegedly using cash in plastic bags, garbage bags, cash bundled together with rubber bands or irregular straps, dirty notes and even cash that appeared to have been buried.

That is part of the Australian Transaction Reports and Analysis Centre (Austrac) case.

Austrac is suing the casino operator for “serious noncompliance” with anti-money laundering laws and failing to monitor telltale signs of money laundering.

This is Austrac’s third live civil court case against a casino group this year, after cases against Australia’s Crown Resorts and Star Entertainment.

Court documents showed a SkyCity Adelaide cashier “struggled to count the notes which appeared to be wet or dirty” and a customer “engaged in large and unusual transactions and patterns of transactions which had no apparent economic or visible lawful purpose”.

Austrac claimed some transactions involved large amounts of cash and cash that appeared to be wet and dirty, and the casino exchanged those dirty notes for cash chips.

The regulator alleges the Adelaide casino made little effort to know its customers who were pumping millions of dollars through its systems.

That created a situation where A$4 billion (NZ$4.23b) may have washed through the Adelaide casino from 2016 by just a few dozen customers.

Losses racked up by these 59 customers amounted to only A$74 million.

“SCA (SkyCity Adelaide) chose to continue business relationships with these high-risk customers, including high-value customers with reported links to organised crime,” Austrac said.

SkyCity yesterday acknowledged the court action and said it could be subject to a civil penalty “which may be material”.

Australian media yesterday said fines of up to $2b could be imposed.

The NZX listed business said: “In the event Austrac’s claim was to be accepted in whole or in part by the Federal Court of Australia, SkyCity Adelaide may be subject to a civil penalty to be imposed by the Court which may be material. SkyCity understands that Austrac has not yet identified the level of penalty it intends to seek”.

The Herald understands that after investigations began last June, the casino operator upped the number of crime-fighting staff and improved its systems.

Austrac is seeking penalties for 124 alleged breaches of the law during the past six years. Each of those carries a maximum penalty of A$18m to A$22.2 so the total fine could top more than $A2.5b if all charges are proved and maximum fines imposed.

The regulator said the casino was “vulnerable to criminal exploitation” and exposed to significant money laundering vulnerabilities.

Gaming accounts could be used to store illicit money outside the banking system and Austrac said organised crime could have used the business which did not have good enough systems in place.

“The casino operated by SCA is vulnerable to laundering of proceeds from a range of serious and organised crime activities, including drug and tobacco offences, tax evasion, tax and welfare fraud and illegal gambling,” the full statement said.

SkyCity shares fell on news of a regulator review of its Adelaide casino as part of a wider look into the sector. Photo / Peter Meecham.

Meanwhile, Austrac said the casino’s anti-money laundering and counter-terrorism team was under-resourced and did not receive adequate training.

Some of the 59 customers served from December 7, 2016 were politically exposed persons or those the occasion 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 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 yesterday 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 program, leaving it at risk of criminal exploitation,” he said.

SkyCity chief executive Michael Ahearne said in response: “Providing a safe and responsible environment for our customers and communities is a priority for us.”

He added: “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.”

The company’s entire market capitalisation is $2.04b.

Its shares were trading down 15 per cent annually, falling further after Austrac sued, from Tuesday’s $2.72 to $2.65 yesterday.