SkyCity Resolves Non-compliance Dispute with DIA
SkyCity Entertainment Group has resolved its dispute with the Department of Internal Affairs (DIA) regarding different breaches of anti-money laundering and counter-terrorism financing regulations.
Earlier this year, the DIA announced plans to initiate high court proceedings against SkyCity and its subsidiary, SkyCity Casino Management (SCML), for alleged violations of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
The draft legal documents highlighted five significant compliance failures. SkyCity pointed out that these issues mostly stem from historical incidents, some of which had been self-reported to the DIA.
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SkyCity Agrees to NZ$4.16m Sanction Fee
SkyCity revealed that since late 2021, it has implemented an enhanced anti-money laundering and counter-terrorism financing programme to strengthen compliance systems and rectify past deficiencies. This initiative includes investing in personnel, technology, and conducting comprehensive reviews of processes and systems to identify and address areas needing improvement.
As a result, SkyCity has successfully reached a settlement with the DIA, admitting to breaching its obligations under the Act. The infractions occurred between February 2018 and March 2023, encompassing issues related to risk assessment, compliance programmes, account and transaction monitoring, enhanced customer due diligence, and the termination of business relationships when necessary. Importantly, the DIA confirmed there was no evidence suggesting SkyCity was directly involved in money laundering or terrorism financing.
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Proceedings and Penalty Recommendation
With the settlement, both parties will recommend to the high court that the case proceed to a penalty hearing. They have jointly proposed a penalty of NZ$4.16m, although the final decision rests with the court. “This settlement is an important outcome,” said Mike Stone, the DIA’s AML/CFT group director. He added:
“We have achieved our desired result without the prolonged duration and expense of court proceedings. Whilst these regulatory breaches are serious, we appreciate SkyCity’s admission of guilt and acknowledgment of its significant failings.”
Stone also commended SkyCity’s efforts to address these issues and enhance its compliance framework. One of the proposed measures includes a pledge to implement mandatory carded play across all New Zealand branches by mid-2025. The SkyCity group operates three gambling venues in New Zealand: SkyCity Auckland, SkyCity Hamilton and SkyCity Queenstown. The latter casino branch in Queenstown is closed until further notice.
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Prove Of Commitment
“It is encouraging to see the progress SkyCity has made in improving its performance in this area and its commitment to ongoing improvement,” Stone added. “We will continue to work closely with SkyCity to ensure it meets its compliance obligations.” SkyCity’s improvements include refreshing its board, appointing new directors with specialised risk expertise, establishing a dedicated risk and compliance committee, and bolstering internal and external audit capabilities with the appointment of a group chief risk officer.
In line with standard practices in New Zealand, SkyCity has accepted the findings and agreed to the penalty. The group had earmarked $45.0m in anticipation of a civil penalty, but the final settlement amount was significantly higher.
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Management Team Change
At the same time, SkyCity has made some significant changes in its senior management team. In April, SkyCity announced that seasoned gambling executive Jason Walbridge will take on the role of CEO starting in July, succeeding Michael Ahearne, who recently departed the group. Additionally, CFO Julie Amey has tendered her resignation. Amey will remain in her role for another six months, with her official departure scheduled for 25 September.
In a related move, SkyCity appointed Andrew McPherson as chief information officer in March. McPherson had been filling the position on an interim basis since November.
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