AUSTRAC’s spotlight on clubs in 2024

April 24, 2024
Clyde Mooney

Under new leadership, financial crimes watchdog AUSTRAC has renewed its money laundering focus on gaming venues, noting the “billions” it believes is fed into machines in clubs by criminals.

Responsible for preventing, detecting and responding to criminal abuse of the financial system, AUSTRAC has worked with the gambling sector, notably pubs and clubs, for years, to help them meet AML (Anti-Money Laundering) and CTF (Counter-Terrorism Financing) obligations.

In 2023 it announced regulatory priorities for 2024 as a focus on the risks faced by businesses, particularly in banking, remittance and gambling, and provided new dedicated resources for operators to assist them in understanding, mitigating and managing the risks.

“If a pub or club suspects a money laundering offence is occurring on their premises they have an obligation under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act to report this to AUSTRAC via a suspicious matter report (SMR).”

The NSW Crime Commission report, released in 2022, found that money laundering by organised crime outfits was not common in clubs and pubs, largely due to poker machines being an inefficient means to ‘wash’ large sums of cash when compared to other methods.

But it was suggested individuals involved with crime are spending ill-gotten cash on gambling and other activities in the venues – the implication being operators might be responsible for policing the personal finances of patrons.

The review found it could not determine what percentage of money put through EGMs in NSW was the proceeds of crime, but guesstimated the amount was in the billions.

AUSTRAC stresses the rules are not regulation ‘for regulation sake’ and that their targets are organisations perpetrating crime including human trafficking and racketeering, although most of the cash is thought to be from the more nuanced arena of drug dealing, which encroaches on another societal issue.

A lack of traceable data at the EGMs is cited as the barrier to calculating the exact scale of the criminal activity, although it is understood that ramping up identification requirements would likely eliminate most if not all money laundering, along with an unknown amount of legitimate trade.

To this end, the trial into cashless gaming has begun, which the gaming minister, David Harris, believes would, if successful, help prevent money laundering activities in venues.

At the start of the year Brendan Thomas joined AUSTRAC as its new chief executive, taking over from Nicole Rose after time spent as deputy secretary at the NSW Department of Communities & Justice, and as head of Legal Aid NSW.

Thomas has cited the entity will be “much more focused” on the clubs sector, which holds roughly 74 per cent of EGMs in NSW, turning over around $70 billion, generating approximately $4.6 billion in revenue for the businesses.

“It’s not just about education, it’s about compliance as well,” warned Thomas.

AUSTRAC’s mandate is to identify weaknesses in AML/CTF regulations and highlight the consequences of inaction, and not to lobby government for change, but Thomas puts particular emphasis on what he calls a growing threat posed by criminal gangs.

He says changes are urgently needed and believes greater operational scrutiny should be placed on the more than 1,000 clubs in NSW, lest they become a conduit to economic detriment.

Australia’s current AML/CTF laws cover banks, gambling entities and gold traders, but Australia is one of only five countries that does not regulate what are known as ‘tranche-two’ sectors, which takes in non-financial industries such as real estate, accounting and legal, and all precious metal and stone dealers.

And AUSTRAC has plans to ramp up enforcement, flagging an increase in penalty notices, while also looking to take more cases to trial, with goals for a body of AML/CTF case law.

Discussion of the expanded tranche-two initiatives has met with fierce resistance from industry bodies, which suggest the rules are an unnecessary increase to compliance costs.


Tags

AML, AUSTRAC, CTF, money laundering


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