An investigation reports criminals are funnelling billions of dollars of “dirty” cash through pub and club EGMs and calls for a massive overhaul including cashless systems and identity collection.
The multi-agency inquiry was led by the NSW Crime Commission, with the Independent Liquor and Gaming Authority NSW (ILGA), AUSTRAC and the Australian Criminal Intelligence Commission, and mandated to focus on investigating and seeking to minimise criminal activity related to Electronic Gaming Machines.
The Crime Commission used special powers to summon witnesses, monitored persons of interest, and extensively analysed data and intelligence holdings across agencies, arriving at eight recommendations (below). The crack down on money laundering through EGMs is notably separate to measures seeking to address problem gambling and harm minimisation.
Two forms of money laundering were examined:
- using EGMs to load and later withdraw ‘clean’ cash, and
- criminals using ‘dirty’ cash to gamble on EGMs
Both are serious offences under the Crimes Act, carrying a maximum penalty of 15 years’ in prison.
The Commission’s report goes on to state that “there are no effective controls or data collection” to identify or prosecute those involved, which clouds the actual numbers attributable to the suspect activity, but the investigations suggest it involves “vast sums of dirty cash that are primarily the proceeds of drug dealing”.
NSW Crime Commissioner Michael Barnes believes poker machines offer criminals one of the last remaining safe havens where criminal enterprises can clean cash or gamble “with virtual impunity”.
The multi-agency investigation targeted suspicious behaviour rather than individual clubs, but did identify eight venues including Cabra Vale Diggers, Canley Heights RSL, Canterbury Leagues Club, Fairfield City Memorial Club, North Sydney Leagues Club (Norths), Parramatta Leagues Club, South Sydney Juniors and Mount Pritchard Community Club (Mounties) as venues targeted by suspected money launderers.
“At the moment serious offenders can enter NSW clubs and pubs, sit down next to patrons in gaming rooms, and openly feed large sums of cash from their crimes into poker machines with no real fear of detection.”
In seeming contradiction, the report also notes that cash “cleaning” is not widespread in clubs and pubs, reportedly because dealing with “vast sums of cash is inefficient compared to other avenues for laundering”.
In response to the release Josh Landis, ClubsNSW CEO said, “For well over a year, the NSW club industry has been accused of allowing criminal gangs to launder substantial sums of dirty cash through poker machines. Today, the NSW Crime Commission has revealed that those allegations were – and are – completely baseless.
“The NSW Crime Commission found that using gaming machines to clean large quantities of dirty money is ‘high risk and inefficient’ and that the practice is not widespread. This is the finding that our not-for-profit member clubs expected.”
Alluding to the age-old inconvenience of the anonymity of cash. Commissioner Barnes said, “It is a deeply concerning peculiarity that in the largely cashless digital economy in which we live that gambling in NSW pubs and clubs remains a $95bn a year information black hole. Clearly, that cannot be allowed to continue.”
The report also identified an apparent lack of awareness by operators and staff of their AML responsibilities, pointing to AUSTRAC’s education sessions and guidance, offering tools to recognise and prevent money laundering.
“It is important that pubs and clubs take their anti-money laundering obligations seriously. The year-long investigation has increased collective understanding of the threat, and renewed vigilance around pubs and clubs will limit the opportunity for criminal infiltration,” added Barnes.
“ClubsNSW welcomes the Crime Commission’s recommendations to further improve the regulatory framework. We note that several of the recommendations were in fact proposed by ClubsNSW to bolster risk controls and empower clubs to ban criminals for life, including the recommendation for a state-wide exclusion register which would allow police to alert venues to patrons with criminal links. We believe this measure, together with the introduction of facial recognition technology announced by clubs and pubs last week, will make it near impossible for a criminal to enter a club in the future,” said Landis.
Key points to the recommendations are:
- mandatory cashless gaming to combat money laundering
- greater data collection on players
- improving EGM monitoring to enhance AML identification and evidence production
- an exclusion program for persons suspected of links to crime
NSW CRIME COMMISSION RECOMMENDATIONS
Recommendation 1 – Government to introduce a mandatory cashless gaming system to minimise EGM related money laundering within pubs and clubs.
Recommendation 2 – Government, in consultation with industry and regulators, create a legislative or regulatory framework requiring certain standardised data be maintained for EGMs to better flag suspected money laundering.
Recommendation 3 – Government to engage with industry to:
- identify ways that collection and analysis of EGM data could be enhanced for the purposes of money laundering identification at a venue level and to improve evidence available for prosecution;
- explore technical and policy/process solutions to better utilise data collected by EGMs; and
- identify ways of creating real-time alerts for money laundering flags.
Recommendation 4 – The legislative and regulatory frameworks governing EGMs in NSW be amended to clarify that persons/entities with functions associated with EGMs must take steps to prevent money laundering.
Recommendation 5 – Government to introduce a mechanism that enables government agencies or venues to recommend the cancellation/revocation of an RCG certification; and a mechanism for the regulator to revoke an RCG certification in appropriate circumstances.
Recommendation 6 – Government to engage with industry and regulators to create a legislative or regulatory mechanism to support the exclusion of persons suspected of dealing with proceeds of crime from venues with EGMs, supplementing the existing rights of venues to exclude patrons from their premises.
Recommendation 7 – Government, in consultation with industry, update education requirements to include education on money laundering and increase the frequency of the training provided to venues from internal and external sources to support venues in discharging their obligations under the AML/CTF Act.
Recommendation 8 – Government work with industry to build the sector’s investment in AML/CTF training and education, and secure support for training from external sources.
ClubsNSW has committed to working with the NSW Government to implement practical, proportionate, and affordable responses to the Crime Commission’s findings to further tighten money laundering controls.