Australia’s financial crime watchdog AUSTRAC has reinforced that one of its key priorities this year is to stamp out criminals exploiting the clubs and pubs sector. 

It comes off the back of AUSTRAC announcing at the end of last year that its regulatory priorities for 2024 will be to focus on the money laundering risks faced by businesses – particularly across the banking, gambling, and remittance sectors, which face higher risks – and help them to understand, mitigate and manage these risks.

“AUSTRAC’s Regulatory priorities for 2024 calls out the gambling sector as an enduring area of focus,” an AUSTRAC spokesperson told Club Management

When asked how frequently criminals are laundering money through clubs across Australia, AUSTRAC explained that “some businesses will be at higher risk due to the size of their operations, the extent of their customer base and whether they offer gaming services across multiple establishments”.

“This is why AUSTRAC has for many years worked with the gambling sector, including pubs and clubs and their associations, to assist them in meeting their Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations. This includes providing education material and examining their compliance.”

According to a recent report by the Australian Financial Review, in NSW alone, some $70 billion is being fed into poker machines in NSW clubs each year. 

AUSTRAC’s new boss Brendan Thomas told the AFR that he believes more than 1,000 clubs operating in NSW require greater scrutiny of their operations.

“It’s not just about education, it’s about compliance as well,” he said. 

2022 NSW Crime Commission report found that the “cleaning” of proceeds of crime is not widespread in clubs and pubs as processing vast sums of cash is inefficient compared to other avenues for laundering. However, large sums of the proceeds of crime are being gambled by criminals in pubs and clubs across the state. 

“At the moment serious offenders can enter NSW pubs and clubs, 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,” NSW Crime Commissioner Michael Barnes said at the time.

“The lack of traceable data collected by EGMs means the exact scale of this criminal activity is impossible to determine but it is clear from our investigations it involves many billions of dollars every year.”

A spokesperson for ClubsNSW said the local industry “fully supports”  AUSTRAC’s mission to implement measures to protect clubs from money launderers.

“In recent times, clubs across the country have met with the regulator to understand its expectations with respect to anti-money laundering best practice,” a ClubsNSW spokesperson said.

Currently, in NSW a trial into cashless gaming is underway. NSW gaming minister David Harris previously touted cashless gaming will help prevent money laundering activities in clubs.

“The strong interest in participating in the cashless gaming trial proves just how serious clubs and hotels are about working with the Government to reduce gambling harm and money laundering associated with electronic gaming machines,” Harris said.

Cash remains a money laundering risk and continues to be a primary store of value and means of payment for criminal activities. 

“As an industry, we are working with the NSW Government on a cashless gaming trial, which will likely involve additional measures to prevent money laundering, beyond what is currently required under the law,” a ClubsNSW spokesperson said.

At the start of last year, AUSTRAC developed guidance for pubs and clubs with gaming machines to put in place measures to harden their business against money laundering.

“Regulated businesses, including pubs and clubs, are required by law to understand the money laundering and terrorism financing risks posed to their business, and to report on certain financial transactions and suspicious activities,” an AUSTRAC spokesperson said.

“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).”

In addition, AUSTRAC conducted a nationwide campaign in 2022 to educate pubs and clubs to recognise and prevent money laundering, reaching over 1,000 venues.

As part of the Tranche 2 reforms being introduced u anti-money laundering and counter-terrorism financing (AML/CTF) regulations will extend to non-financial professions including real estate, accounting and law, as they do in most other countries including the UK, Canada and New Zealand.

Updated 12.30pm AEST, 9 April, 2024: ClubsNSW comments added.

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