SkyCity Entertainment has announced that it is recognizing a AUD$45 million (US$29.2 million) civil penalty provision in its fiscal year 2022-2023 financial statements in preparation for potential upcoming civil penalties from AUSTRAC, Australia’s financial crime watchdog.
AUSTRAC first announced in December of last year that it was commencing civil proceedings against SkyCity Adelaide in federal court over repeated violations of the country’s Anti-money Laundering and Counter Terrorism Financing Act 2006.
Each violation alleged by AUSTRAC carries a range of penalties from AUD$18 million to AUD$22.2 million (US$11.7 million to US$14.4 million), but because SkyCity was said to have committed an “innumerable number” of breaches, it is not possible to estimate a maximum penalty at this time.
“The proceedings remain at a relatively early stage with AUSTRAC and SkyCity Adelaide currently working towards agreeing facts and potential admissions before the Court identifies a process for any remaining disputed issues and any potential penalty to be determined,” the company said in a statement, according to Inside Asian Gaming.
“Estimating the potential exposure to penalties with any degree of accuracy at this stage of that ongoing process remains challenging, particularly given the outcome is highly dependent on a range of factors which are not yet known.
“The size of any penalty SkyCity Adelaide is exposed to could vary materially from the amount of the provision and significant uncertainties remain. Any eventual civil penalty applied to SkyCity Adelaide in relation to the proceedings may be significantly higher or lower than the provision. The timing of any civil penalty to be paid by SkyCity Adelaide is also uncertain.
In addition to the penalty provision, SkyCity announced in an August 14 filing that it will also recognize a AUD$45.6 million (US$29.6 million) impairment to the casino license value of SkyCity Adelaide, upon completion of its yearly impairment assessment.
Both of the recognitions will not impact SkyCity’s normalized earnings for its full-year statements, which are expected to be released August 23. The company has said that its earnings will fall within previous forecasts of NZ$300 million and NZ$310 million (US$195 million and US$201 million).
