The heightened regulatory scrutiny on Adelaide Casino’s anti-money laundering policies dominated discussions at SkyCity Entertainment Group’s annual general meeting on Friday.

The company’s leadership answered questions from shareholders about the status of two separate investigations into SkyCity Adelaide from the federal government’s financial crimes watchdog AUSTRAC and retired South Australian Supreme Court judge Brian Martin KC.

SkyCity Adelaide chair Glenn Davis told shareholders that “both inquiries are very detailed and huge amounts of information have been supplied in both cases”.

“It’s been a heavy burden on our people but they continue to work very hard to meet the demands of the inquiry schedules and to do all they can to cooperate fully,” Davis told the AGM.

“And whilst we’d all like to have the inquiries behind us and know the answer, it’s too early for us to say anything definitively about where these inquiries might go.

“What I can tell you is that in our work to review our practices, given the heightened industry scrutiny, we identified areas where enhancements to our anti-money laundering program are required or appropriate.”

Martin’s independent review is investigating whether Adelaide Casino is still fit to hold a license. His report is due to be handed down on February 1, 2023.

The inquiry was set up by the state government’s Liquor and Gambling Commissioner in July after probes into other casino operators interstate revealed serious regulatory issues.

AUSTRAC’s investigation, which commenced in June 2021, is probing SkyCity Adelaide for “potential serious non-compliance” with Australian anti-money laundering and counter-terrorism financing laws.

“I can’t go into the detail of the AUSTRAC inquiry and attempt to foresee its end point and outcome,” Davis said.

“But we obviously face the risk of enforcement action and penalties if the regulator takes the view our performance was of a standard that warranted that.

“Let me be clear though, whatever the outcome, SkyCity does not want criminal activity to infiltrate its properties and in no way wants to be involved with those who are seeking to launder the proceeds of criminal activity or otherwise avoid the law.

“The evils of money laundering are many and we want no part of it.”

Davis said SkyCity Adelaide has adopted “a large range of recommendations” from independent experts to “uplift our processes, systems and culture regarding anti-money laundering compliance”.

The AGM also heard that SkyCity is keeping “liquidity headroom” more than three times higher than normal levels due to future uncertainty associated with a range of factors, including COVID-19 and “potential regulatory penalties”.

SkyCity’s New Zealand-based chair Julian Cook reiterated an earlier warning to shareholders that the company could face “significant financial and reputational impact” if AUSTRAC chooses to bring enforcement action against SkyCity.

He said the company was up to its “ninth information request” from AUSTRAC.

“We are continuing to respond to a significant number of questions and information requests from AUSTRAC, which we are treating very seriously,” Cook told the AGM.

During the Q&A portion of the AGM, one SkyCity shareholder told the board and management: “You seem to be behind the eight ball in regards to AML (anti-money laundering) legislation, i.e. reacting to censure as opposed to being ahead of the game.”

“Why aren’t the appropriate safeguards in place and what are management and the board doing to address this?” the shareholder asked.

Cook responded: “Look, I’m not going to argue with your comment about being behind the eight ball.”

“Suffice to say myself and the rest of the board and the management team all find that position as being quite disappointing – we are not happy with it.

“We will not be staying behind the eight ball, I can assure you of that.

“There will be a fairly singular focus from myself, the board and the management team as to taking us forward to a position where we can say quite honestly, we are best practice and we are ahead, well ahead, of any minimum standards.”

Cook said a previous review from AUSTRAC in 2016 and other external audits of SkyCity Adelaide’s AML processes “came back clean”.

“But that does not change the fact that we have found areas where improvements are required,” he said.

“I think from a board perspective this would be the largest piece of work that the board spends its time and focus on, and certainly within management there is an incredible degree of focus being applied to this.”

Cook said a “large programme of work” was underway in Adelaide to improve anti-money laundering compliance, including the establishment of a standalone Risk and Compliance Committee which will “give a much greater lens and focus to anti-money laundering”.

“It’s never one thing that fixes this, these sorts of issues, it’s multiple things across the business,” he said.

He said there were now 30 people across SkyCity handling AML and financial crime programs.

“[There is] significant application of people and resourcing, we will continue to do that until we are happy with how these areas are performing,” he said.

“There is significant investment in systems, particularly IT and training and culture which we have talked about and will continue to look closely at.

“This focus is not over the short term, this will be over the next sort of months and probably years to get us to a position where we’re happy and we’re proud to be there.”

AUSTRAC’s enforcement investigation of SkyCity Adelaide stemmed from concerns identified during a compliance assessment that began in September 2019.

The formal investigation is focusing on SkyCity Adelaide’s management of customers identified as high risk and politically exposed persons between July 1, 2015, and June 30, 2016, and from July 1, 2018, to June 30, 2019.

SkyCity at the time said the potential serious non-compliance included concerns relating to ongoing customer due diligence and adopting and maintaining an anti-money laundering and counter-terrorism financing (AML/CTF) program.

The ongoing investigations into SkyCity Adelaide come amid intense regulator scrutiny on the casino sector nationally.

In New South Wales, Star Entertainment Group was hit with a $100m fine and had its license suspended by the NSW casino regulator last month, after an inquiry found numerous breaches including lying to banks and money-laundering.

Star was also found unfit to hold a casino license in Brisbane and Gold Coast following a separate money laundering probe in Queensland.

Crown Resorts, meanwhile, was hit with an $80m fine earlier this year from the Victorian regulator for enabling illegal transfers of funds for international high-rollers.

SkyCity CEO Michael Ahearne said the company would “continue to carry appropriate levels of funding liquidity headroom to safeguard against our near-term uncertainties”.

“Our liquidity headroom is currently at levels over three times higher than our Treasury Policy requires in a normal operating environment,” he told the AGM.

“Our current capital management approach is to retain these levels until we have more clarity on any implications on our business from future material uncertainties, including the carpark buyback, COVID-19 recovery, macroeconomic factors, and potential regulatory penalties.”

SkyCity’s casino license in Adelaide runs until 2085. The company reported $184m in normalised revenue from its Adelaide operations last financial year.