Adelaide is the sole focus of the probe into SkyCity Entertainment Group, and VIP earnings understood to be at the centre of investigations only account for 1 per cent of group earnings, an investment analyst said today.
Andrew Kelleher, a director of JMI Wealth in Auckland, told today's Mike Hosking Breakfast on Newstalk ZB that allegations were also historic, dating back to the last decade.
SkyCity is dual-listed on the NZX as well as the ASX "so the issues around the investigation of SkyCity activities came to light Monday, share price in Australia fell 6.5 per cent".
The Australian Transaction Reports and Analysis Centre [Austrac] said it had identified potential 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.
"So to put some context around this, firstly, they are historic allegations," Kelleher said today.
"This refers back to 2015/16, which is quite some time ago, and 2018/19, so we have no idea how long this investigation will take. It could be quite lengthy and it refers to SkyCity Adelaide's VIP area earnings which I believe where the issue is.
"That represents approximately 1 per cent of group earnings, so you wouldn't expect on that basis any potential resulting fee to be material. We don't know yet. But that's the expectation. It begs the question: is there risk across the rest of the business?
"New Zealand does have obviously a different regulator. To the best of my understanding, SkyCity has invested quite a lot recently in the AML and major client processes.
"It's not just SkyCity," Kelleher noted.
National Australia Bank, Crown Perth and Star are all facing the possibility of multi-million-dollar penalties for potential breaches of anti-money laundering laws.
Kelleher noted the investigation news emerged on Monday, New Zealand's Queen's Birthday holiday.
SkyCity said yesterday the potential serious non-compliance included concerns relating to ongoing customer due diligence, adopting and maintaining an AML/CTF Program and compliance with Part A of an AML/CTF Program.
"These concerns have been identified in the course of 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 the 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.
"Austrac has made clear that it has not made a decision regarding the appropriate regulatory response that it may apply to SkyCity Adelaide, including whether or not enforcement action will be taken. Austrac has indicated that it will request information from SkyCity as part of its investigation. SkyCity will fully co-operate with Austrac in relation to those inquiries and with the investigation of SkyCity Adelaide."
The company said it took anti-money laundering responsibilities and obligations 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," the company said at 8.30am on Tuesday in a market update.
A SkyCity spokesperson said today the business had no further comment to make. Chief executive Michael Ahearne is not talking further about the issue.
Shares traded on the NZX around $3.45 yesterday.