AUSTRAC's recent enforcement action against SkyCity Adelaide Pty Ltd ("SkyCity") reinforces the importance of ongoing customer due diligence for all reporting entities. The Federal Court of Australia has ordered SkyCity to pay a $67 million penalty for breaching its obligations under theAML/CTF Act, including:
- Failing to conduct necessary checks on 121 customers despite being aware they were of interest to law enforcement or showed signs of increased money laundering risk;
- Failing to establish an appropriate framework to ensure adequate board and senior management oversight of its AML/CTF Program.
SkyCity admitted that it had breached the Act over several years, enabling high-risk clients to channel millions of dollars through the casino while concealing the origin and ownership of the funds.
AUSTRAC's position on ongoing customer due diligence is that it should be risk based. Reporting entities are required to:
- Determine when customer information should be re-verified throughout the customer relationship via a risk assessment and development of triggers; and
- Be able to identify where there is an increased risk of money laundering or terrorism financing via its transaction monitoring program.
Key Action Items for Reporting Entities
This case is a clear example of AUSTRAC's willingness to take enforcement action against reporting entities who do not comply with their obligations under the law. In the light of the AML/CTF reforms which commence next year, this is an opportunity for reporting entities to reconsider their AML/CTF Programs and the procedures in place to implement the Program.
Reporting entities should:
- review their ongoing customer due diligence procedures, including transaction monitoring and risk assessments;
- consider triggers for ongoing customer due diligence and whether they are appropriate for the nature and size of your operations;
- ensure staff at a management level remain alert to the risks of money laundering and terrorism financing and that the AML/CTF Program has board or director oversight;
- ensure all staff receive training in relation to money laundering and terrorism financing and are aware of the risks posed to your specific operations.
Background
In December 2022, the Australian Transaction Reports and Analysis Centre ("AUSTRAC") initiated civil penalty proceedings in the Federal Court after investigating SkyCity's failure to comply with the AML/CTF Act.
This case marks the second major civil penalty imposed on an Australian casino, following the $450 million fine ordered against Crown Melbourne and Crown Perth in 2023. These actions highlight AUSTRAC's focus on protecting Australia's financial system from exploitation.
Further Reading
- AUSTRAC and SkyCity agree to proposed $67 million penalty
- Federal Court makes ruling in SkyCity case
- AUSTRAC Guidance -Customer Due Diligence
- Sophie Grace Blog: Understanding AML/CTF Reforms -Part 1: Existing Reporting Entities
- Sophie Grace Blog: Understanding AML/CTF Reforms -Part 2: Value Transfers
- Sophie Grace Blog: Understanding AML/CTF Reforms -Part 3: New Designated Services -'Tranche 2'
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
