SkyCity Entertainment shares will take a hit today after falling 6.5% on the Australian stock market yesterday after accusations that its Adelaide operations may be in breach of counter-terrorism and anti-money laundering legislation. 

On Sunday, the dual-listed casino and hotel operator said it had been informed by Australian Transaction Reports and Analysis Centre Regulatory Operations Team (AUSTRAC) that it has identified “potential serious non-compliance” by SkyCity Adelaide with the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007.

AUSTRAC is responsible for preventing, detecting and responding to criminal abuse of the financial system to protect the community from serious and organised crime.

The potential serious non-compliance includes concerns relating to ongoing customer due diligence, adopting and maintaining an AML/CTF programme and compliance with Part A of an AML/CTF programme. 

Part A must include processes and procedures to help identify, mitigate and manage money laundering and terrorism financing risks a business may reasonably face.

The concerns were identified in a compliance assessment which AUSTRAC commenced in September 2019 focusing on SkyCity Adelaide’s management of customers identified as high risk and "politically exposed" persons over periods from July 1, 2015 to June 30, 2016 and July 1, 2018 to June 30, 2019. 

The matter has been referred to AUSTRAC’s enforcement team, which has initiated a formal enforcement investigation into the compliance of SkyCity Adelaide.

According to SkyCity, AUSTRAC has made clear it has not made a decision regarding the appropriate regulatory response that it may apply to SkyCity Adelaide, including whether enforcement action will be taken. 

AUSTRAC has indicated it will request information from SkyCity as part of its investigation, the casino operator said.

SkyCity will fully cooperate with AUSTRAC in relation to those inquiries and with the investigation of SkyCity Adelaide, it said. 

“SkyCity takes its anti-money laundering responsibilities and obligations very seriously. SkyCity has processes and practices in place in its business to detect and prevent money laundering and continually reviews these to ensure it meets all anti-money laundering requirements,” it said.

The shares closed Friday at NZ$3.66 and have gained 23% over the past 12 months. NZ markets were closed Monday but in Australia the shares closed at A$3.18.