The company admitted to the breaches and agreed on the fine with the Department of Internal Affairs
Violations of the Anti-Money Laundering and Countering Financing of Terrorism (AML-CFT) Act 2009 are set to syphon $5.06m from Christchurch Casinos Ltd’s (CCL) coffers.
In a decision released by the High Court (Christchurch registry) yesterday 6 October, judge Rachel Dunningham indicated that CCL had entered into a settlement agreement with the Department of Internal Affairs after confessing to seven breaches of its AML-CFT obligations.
CCL’s conduct was first flagged in 2019. The company appointed accounting firms Crowe and BDO to conduct independent audits of its risk assessment and AML-CFT programme as required by law; reports from 2019 and 2021 suggested that CCL should update its AML-CFT programme and enhance the automation of its electronic monitoring system to limit errors resulting from manual data entry.
The Department of Internal Affairs conducted an on-site inspection of CCL in April 2021 and found that CCL’s customer due diligence and account monitoring approach was lacking. The department called on CCL to remediate the deficiencies; however, the company challenged the department’s findings and failed to follow the remediation direction.
The Department of Internal Affairs began investigating CCL’s Act compliance in May 2023 and issued seven notices seeking information and records from the casino over a year’s time. CCL admitted to delaying its initial response to the notices.
Moreover, a 2024 report revealed that CCL did not comply with customer due diligence and transaction reporting requirements recommended under the AML-CFT Act. The company also did not conduct internal AML audits every six months during the audit period indicated in its programme.
CCL confessed that it had not established, implemented and maintained a fully compliant AML-CFT programme in relation to customer due diligence requirements. It also failed to have a programme to preserve written findings on certain issues.
CCL also admitted that it had not maintained a programme for account monitoring and compliance management. In addition, it did not monitor accounts adequately and did not end business relationships with customers when needed.
“While the breaches of the Act were not necessarily deliberate, the failure to act promptly when alerted to the deficiencies can be criticised, as can the somewhat casual approach which was taken by CCL to the extremely important obligations it has under the Act to deter and prevent AML/CFT activities”, Dunningham wrote in the decision.
CCL cooperated with the Department of Internal Affairs and sought to resolve the matter early in legal proceedings; thus, the pecuniary penalty was lowered from $6.325m to $5.06m. Both parties held that the fine reflected the severity of CCL’s civil liability and highlighted the AML-CFT Act’s purpose.
The High Court did not order CCL to pay costs.
