New Zealand Casino Operator SkyCity Faces Prosecution over AML Failures
LISTEN TO THIS ARTICLE:New Zealand's Department of Internal Affairs is pursuing legal action against SkyCity's management arm in a civil case linked to the country's Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act. SkyCity, the operator of several casinos in New Zealand, including SkyCity Auckland, SkyCity Hamilton, and SkyCity Queenstown, is set to appear in the High Court to address five separate legal actions brought against it.
Admitted Failures
Aside from its New Zealand operations, SkyCity also runs the SkyCity Adelaide casino in Australia. Just last week, the company reached an agreement with Australian authorities to settle alleged breaches of anti-money laundering and counter-terrorism financing laws, resulting in a hefty penalty of approximately $75 million.
Related: SkyCity Sets Aside Tens of Millions for Anti-Money Laundering PenaltiesWhile the investigation into SkyCity's Adelaide casino license continues in Australia, New Zealand's Gambling Commission is conducting its own inquiry into a complaint regarding a breach of host responsibility spanning from August 2017 to February 2021.
In response to the impending legal proceedings, SkyCity issued a statement to the market acknowledging the allegations of significant compliance issues, primarily of a historical nature, though not entirely. The company noted that some instances of non-compliance had been self-reported to the Department of Internal Affairs and that efforts to address these issues had been underway since late 2021.
SkyCity emphasized its commitment to rectifying compliance shortcomings, highlighting substantial investments in personnel and technology, as well as comprehensive reviews of its processes and systems to pinpoint areas requiring improvement.
Expressing disappointment at falling short of expected standards, SkyCity asserted its willingness to cooperate with the department to swiftly resolve the matters at hand. However, the company refrained from providing further commentary on the ongoing legal proceedings, citing the impending court appearance.
Shares Take a Hit
While SkyCity estimated its potential liability from the five claims to be a maximum of NZD8 million (US$4.9 million) collectively, the outcome of the court proceedings remains uncertain.
Shares of SkyCity’s stock experienced a notable decline as a result of the news, dropping as much as 2.4% to NZD2.03 (US$1.24). This marked the most substantial decrease since December 19. If these losses persist, it will signify the largest drop in over a month.
This downward movement pushed the stock to its lowest level since February 2, reflecting investor concern following the announcement of the legal action. Year-to-date, SkyCity's stock has faced significant challenges, showing a decline of 14.3% as of the latest close.
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