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: The Adelaide-based SkyCity Entertainment Group has been given permission to keep its land-based casino licence. 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.
An independent assessment conducted by former Supreme Court Justice Brian Martin found that SkyCity Adelaide had made mistakes in the past. The report claimed, nevertheless, that modifications to its systems have eased many of its worries.
The audit did say that SkyCity needs to make its AML and CTF processes even better. But the operator's immediate future in Adelaide is safe because it has been confirmed that it can keep the licence.
The lawsuit goes back to September 2019, when Australia started a campaign for all businesses to follow the rules. In June 2021, SkyCity was told about possible malfeasance, and an inquiry led by Martin began soon after.
After that, in December 2022, the Australian Transaction Reports and Analysis Centre (AUSTRAC) took SkyCity Adelaide to federal court for failing to follow anti-money laundering (AML) laws. 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 if 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."
"The importance of prior errors should be looked at in light of how the licensee has acted 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 had a pattern of "serious and systemic non-compliance" with AML and CTF regulations when it first raised concerns about the casino.
This meant that its AML and CTF programs didn't have mechanisms and controls 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.
Another problem was that SkyCity didn't set up a system to keep an eye on transactions and find suspicious activity that was right for the size, nature, and complexity of the business. AUSTRAC also found that SkyCity didn't have a "proper enhanced customer due diligence program" to do extra checks on consumers who were more likely to be a danger.
SkyCity and AUSTRAC reached a settlement 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.
Will SkyCity be ready for repairs in 2027?
There is a 541-page study that explains Martin's results. He talked about a "poor and inadequate culture" in the past, but he agreed with the steps taken to fix those problems.
Martin says that this attitude and the way management handled AML and CTF didn't really alter until Jason Walbridge became CEO in April 2024. Julie Amey stepped down as CFO, and Andrew McPherson became the new chief information officer.
Martin also said that things are still moving forward, with remediation set to be finished by June 2027. But he wasn't sure if this time range was practical, given how much work there remains to accomplish.
The report noted, "Even with good intentions, experience has shown that the size and complexity of the tasks make it unlikely that full remediation will be possible by June 2027."
"While it seems unlikely that full remediation will happen by June 2027, the change in culture and ongoing progress should not be taken lightly." Also, there are good reasons to believe that the licensee will be able to meet its main responsibilities 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 upgrades.
SkyCity's Walbridge admitted to its past mistakes in response to the results. He also said again that the operator is committed to making its systems better and stronger.
"We fully accept and acknowledge the report's findings that we did not meet the standards required, and we apologise for those failings," Walbridge added. "We also recognise that we still have work to do.
"We've made big improvements to our leadership, resources, and systems." This includes a promise to spend $60 million over three years to change our culture, improve our methods for dealing with financial crime, and take more responsibility as a host.
"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 indicated that SkyCity would still have 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 perfect health.
"Many of the problems brought up have either been fixed or are being fixed through a work program overseen by the independent monitor since August 2023, but the flaws and violations found are very troubling."
"I am looking at Mr. Martin's conclusions and the work that Consumer and Business Services is still doing to figure out what enforcement action I might take because of these violations.
"I will also look into what steps may be needed for the licence to continue to work in the future," Humphrey said in conclusion.
