SkyCity (ASX:SKC) share price sinks 9% on AUSTRAC news

This casino and resorts operator is under investigation…

James Mickleboro

Author Bio James Mickleboro is an investment writer and analyst who has worked with The Motley Fool Australia for 10 years, covering ASX shares, market news, broker research, dividends, growth stocks, and long-term investing ideas. Over that time, James has written extensively about Australian equities and developed a particular focus on helping everyday investors understand the stories behind share price moves, company announcements, broker views, and broader market trends. His best investment recommendation was identifying Afterpay while it was still a small-cap growth share, before its rise into one of Australia’s biggest technology success stories. His worst investment lesson came from CSL Ltd (ASX: CSL), where he was burnt by believing management could turn the business around sooner than the market ultimately allowed. Areas of Expertise ASX shares Growth and dividend investing Broker research Interpreting company announcements Market news Portfolio strategy Long-term wealth creation Education Bachelor of Politics, Philosophy and Economics. CFA Institute Social Media LinkedIn Favorite Investment Quote "It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price." — Warren Buffett

Published June 7, 2021 10:09 am AEST

The SkyCity Entertainment Group Limited (ASX: SKC) share price is under pressure on Monday morning.

At the time of writing, the casino and resorts operator's shares are down 9% to $3.08.

gambling asx share price fall represented by woman in soccer had looking frustrated at tablet screen — Image source: Getty Images

Why is the SKyCity share price under pressure?

Investors have been selling the company's shares this morning after it revealed that AUSTRAC has identified potential serious non-compliance by SkyCity Adelaide.

This non-compliance relates to the Australian Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007.

According to the release, the potential serious non-compliance includes 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 were identified during the course of a compliance assessment which was commenced by AUSTRAC back in September 2019. It was focusing on SkyCity Adelaide's management of customers identified as high risk and politically exposed persons.

What now?

The matter has been referred to AUSTRAC's Enforcement Team, which has now initiated a formal enforcement investigation into the compliance of the casino.

At this stage, AUSTRAC has made it clear that it hasn't yet made a decision regarding what the appropriate regulatory response may apply to SkyCity Adelaide. This includes whether any enforcement action will be taken.

SkyCity has advised that it will fully cooperate with AUSTRAC and stressed that it takes its anti-money laundering responsibilities and obligations very seriously. It also notes that it 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.

Crown hit by investigation

In other news, the Crown Resorts Ltd (ASX: CWN) share price is trading lower today after revealing an AUSTRAC investigation of its own.

For the same reasons as above, the regulator has initiated a formal enforcement investigation into the compliance of Crown Perth.

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