Christchurch Casino. Photo: Supplied / Christchurch Casino
The High Court has agreed to impose a $5 million dollar penalty on Christchurch Casino for breaching its obligations under anti-money laundering and terrorism financing laws.
Justice Rachel Dunningham said the penalty of $5.06m, which both the casino and Department of Internal Affairs (DIA) had previously agreed to, is "significant", and reflected "serious" deficiencies in the casino's systems.
DIA launched proceedings against Christchurch Casino Ltd (CCL) for alleged breaches under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, following an investigation it did between May 2023 and September 2024.
Christchurch Casino was not accused of being directly involved in money laundering or the financing of terrorism.
DIA found that between December 2018 and December 2023, the casino failed to establish, implement and maintain an anti-money laundering and countering-financing of terrorism compliance programme, adequately monitor accounts, conduct enhanced customer due diligence, terminate existing business relationships when required, and keep required records.
The casino admitted the breaches and both parties sought the High Court's agreement their settled penalty was sufficient.
In assessing the casino's breaches, Justice Dunningham came to a penalty of $6.33m, but imposed a 20 percent reduction for the casino's admission of liability and co-operation with DIA. She did not find any aggravating factors.
She said the agreed penalty was "significant", and that there "serious systemic deficiencies in CCL's systems and in its oversight of its operations".
"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."
In her judgement, Justice Dunningham criticised a number of "deficencies" in the casino's procedures, often referring to DIA's investigation.
Transactions of significant value, which should have been subject to enhanced customer due dilligence, were not done, she said.
This enhanced due diligence means verifying identity requirements, and, depending on the level of risk involved, taking reasonable steps to verify sources of wealth and money.
Transactions totalling about $56m were undertaken by 24 sample customers and should have triggered the higher level of customer due diligence.
The casino then should have terminated its business relationship with these customers - but while it imposed a ban on 11 customers, it did not terminate its relationship with them.
The casino also did not undertake enhanced due diligence on the customers, despite them being subject to the ban.
Five of the customers were also the subject of one or more suspicious activity reports.
Justice Dunningham also said there were "systemic problems with the casino's record keeping". That included not keeping written findings of investigations into potentially suspicious activities.
She also said the casino's programme for regularly monitoring customer account activity had "significant limitations" and was susceptible to error, resulting in 285 duplicate transactions.
As part of its anti-money laundering programme, the casino said it would complete internal audits, reviewing the programme and if necessary updating it.
Justice Dunningham said the casino stopped conducting internal audits on its own programme after September 2020, and failed to review and revise the programme between June 2021 and September 2024.
She said the $5.06m penalty reinforced strict adherance to laws around anti-money laundering and the financing of terrorism, which are in place to detect and defer those crimes, and to "enhance confidence in New Zealand's financial system".
In a media release issued in August, a Department of Internal Affairs spokesperson said it was pleased the casino had agreed with its $5m penalty.
"While the regulatory breaches were serious, we acknowledge Christchurch Casino's decision to admit to the breaches and take responsibility for what were substantial failings."
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