After a long examination, SkyCity was given permission to keep its Adelaide casino licence.
Brian Martin, a former Supreme Court Justice, noted that SkyCity didn't make any headway in changing its systems until Jason Walbridge became CEO in 2024.
SkyCity FY25 SkyCity Entertainment Group has been given the go-ahead to keep its land-based casino licence in Adelaide. This comes after South Australia's gambling authority concluded that the operator had made enough changes to its anti-money laundering (AML) and counter-terrorism financing (CTF) protocols.
Brian Martin, a retired Supreme Court Justice, led an independent inquiry that found SkyCity Adelaide had made mistakes in the past. The report, on the other hand, indicated that modifications to its systems have eased many of its worries.
The audit did say, nevertheless, that SkyCity has to make its AML and CTF processes even better. But the operator's future in Adelaide is safe for now because it has been confirmed that it can keep the licence.
The lawsuit goes back to September 2019, when Australia started a drive to make sure all businesses followed the rules. SkyCity was told of possible malfeasance in June 2021, and Martin's inquiry started soon after.
In December 2022, the Australian Transaction Reports and Analysis Centre (AUSTRAC) took SkyCity Adelaide to federal court for failing to follow anti-money laundering rules. Martin kept looking into the operator on his own, and this week the whole report came out.
Martin remarked, "If I had been asked to decide whether the licensee and SCEG (SkyCity Entertainment Group) were suitable at the end of October 2021, the answer would have been that neither were." "Things have changed since then.
We need to think about how important earlier mistakes are in light of the licensee's actions since then, changes in staff, and the licensee's present corporate culture and governance.
"I am happy that the licensee is a good person to have the licence and run the casino today."
What did SkyCity Adelaide do that was wrong?
AUSTRAC noted that SkyCity Adelaide showed a pattern of "serious and systemic non-compliance" with AML and CTF regulations when it first brought up its concerns about the casino.
This meant that its AML and CTF programs didn't have mechanisms and controls that were based on risk. It also didn't set up a good system for the board and senior management to keep an eye on these projects.
There were also problems with not setting up a system to keep an eye on transactions and find suspicious activity that was right for SkyCity's size, type, and level of complexity. AUSTRAC also concluded that SkyCity didn't have a "appropriate enhanced customer due diligence program" to do extra checks on clients who were more likely to be a risk.
SkyCity and AUSTRAC reached an agreement in May 2024. The operator agreed to pay a fine of AU$67 million (US$44 million). It had set aside $45 million in case it had to pay a civil fine, but the actual figure was far greater.
Is SkyCity ready for the 2027 cleanup?
Martin's conclusions are in a 541-page report. He talked about a "poor and inadequate culture" in the past, but he was okay with the steps taken to fix the problems.
Martin says that this culture and management's approach to AML and CTF didn't really shift until Jason Walbridge became CEO in April 2024. Julie Amey stepped down as CFO, and Andrew McPherson took over as chief information officer.
Martin also said that progress is still being made and that cleanup will be done by June 2027. But he wasn't sure if this time range was practical, given how much work there was to accomplish.
The report noted, "Even with good intentions, experience has shown that the size and difficulty of the tasks will make full remediation by June 2027 hard to achieve."
"While full remediation by June 2027 seems unlikely, the change in culture and ongoing progress should not be underestimated." There are also compelling reasons to believe that the licensee will be able to meet its main obligations under the regulatory regime as remediation moves forward.
Martin was happy that SkyCity was able to keep its licence, thus the Adelaide casino will stay open for the time being.
SkyCity promised to make more changes.
SkyCity's Walbridge admitted to its past mistakes in response to the results. He also said again that the operator was committed to making its systems better and stronger.
"We fully accept and acknowledge the report's findings that we did not meet the required standards, and we apologise for those shortcomings," Walbridge added. "We also recognise that we still have work to do.
"We've made big improvements in leadership, resources, and systems." This includes a promise to spend $60 million over three years to change our culture, improve our financial crime processes, and make sure our hosts are responsible.
"Our team has worked hard to raise our standards, better meet our obligations, and take better care of our customers."
Brett Humphrey, the South Australia Liquor and Gambling Commissioner, also talked about the study. He added that SkyCity will keep the licence, but he couldn't rule out more action or steps for the operator.
"I agree with Mr Martin's conclusions that SkyCity Adelaide is a good place to hold and run the casino licence and that SkyCity Entertainment Group is a good partner for SkyCity Adelaide," he said. "But let me be clear, this does not mean that SkyCity Adelaide is in good health.
"Many of the problems that were brought up have either been fixed or are being fixed through a program of work that has been overseen by the independent monitor since August 2023. However, the deficiencies and breaches that were found are very worrying."
"I am looking at Mr. Martin's findings and the ongoing work of Consumer and Business Services to decide what enforcement action I may take in light of these violations."
Humphrey ended by saying, "I will also look into what steps may be needed for the licence to continue to work in the future."
