Quarter of poker machines in NSW clubs could be susceptible to money laundering, agency says
Federal laws require a compliance program to be in place so that staff at licensed clubs and hotels can identify, mitigate and manage gamblers suspected of using the pokies to launder money from crime such as drug dealing.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) said the largest compliance program provider in the state is Betsafe, a business founded by seven clubs nearly 30 years ago, that also outsources a responsible gambling program to industry members.
Betsafe's compliance program is central to AUSTRAC's Federal Court action against one of Australia's largest club operators, Mounties Group.
"One in four gaming machines in NSW are managed by clubs whose program is run by Betsafe, so we don't know whether those programs are adequate for those clubs," AUSTRAC's chief executive Brendan Thomas told the ABC.
"We're worried that we might see what we've seen in Mounties replicated in other organisations throughout Australia."
AUSTRAC is alleging Betsafe's program systematically failed to meet anti-money laundering (AML) and counterterrorism financing (CTF) obligations spelled out under the law, in its court action against Mounties.
Betsafe has declined repeated requests for comment from ABC News.
Its programs are used at more than 80 gaming venues in NSW and the ACT, according to a webpage that has since been taken down.
These gaming venues can mix-and-match Betsafe programs, choosing to use its responsible gaming program, and not its AML/CTF program, for example.
Mr Thomas said AUSTRAC is not empowered under the law to launch court action against Betsafe.
"This isn't a victimless crime," he said.
Industry advocacy group ClubsNSW said it was working with AUSTRAC to make sure its members adhered to laws that safeguard against money laundering.
"ClubsNSW recommends that member clubs exercise care and diligence when utilising the services of third-party providers to help meet their AML/CTF compliance obligations and that they have their AML/CTF programs regularly reviewed by an independent entity," a spokesperson said in a statement.
AUSTRAC has successfully prosecuted casino operators in Melbourne, Perth and Adelaide, and the agency's action against Sydney's Star Casino remains before the Federal Court.
But it believes increased enforcement has caused criminals to turn to local venues instead.
"We're concerned that there may be a shift of money laundering activity from casinos to pubs and clubs," Mr Thomas said.
It is unclear if the regulator plans on launching court actions against other clubs or hotels.
"Our examination of gaming machines won't stop with Mounties, and it certainly hasn't stopped with Mounties," he said.
Troy Stolz was working for ClubsNSW as an AML/CTF compliance manager when he leaked a confidential board paper in 2019, which claimed hundreds of clubs were falling short of their legislated obligations.
"I was witnessing lots of rubber bands on the floors in clubs, which is predominant with having bundles of cash tied together … and syndicates playing up to two machines each at a time," he said.
AUSTRAC's court action against Mounties Group could work as a deterrent, the 56-year-old said, possibly inspiring other clubs to improve their compliance systems.
"This is a monumental period of time in clubs history, this stops all sorts of predator crimes.
"There will be clubs scrambling to review their policies and their insurance policies, I believe, to see if they've got a claim to make against Betsafe."
The NSW Crime Commission concluded in an inquiry three years ago that billions in dirty money was being gambled in poker machines at clubs and hotels.
AUSTRAC defended its decision to bring a court action years after initial reports.
"We need to make sure that our case is watertight, that we've got incredibly strong evidence to prove every element of our case before a court," Mr Thomas said.
The intelligence agency is hoping the Federal Court action against Mounties will act as a stern warning to an industry with about 1,000 venues.
The group, which operates up to nine venues across Sydney's south-west, Northern Beaches and the Central Coast, was using Betsafe's compliance program when $4.17 billion was fed into its 1,300 poker machines over four financial years to 2023.
AUSTRAC is alleging in court documents the program is inadequate by citing a sample of 10 suspicious gamblers, who turned over $139.9 million and were paid out close to $10.5 million.
The gamblers exhibited a range of behaviours the agency considers suspect.
This includes a practice known as "bill stuffing", where cash is put into a pokie machine only to be withdrawn as a cheque, even though little or no game play has taken place.
Another behaviour is gambling large sums of money, despite personal and employment status.
Mounties Group allegedly identified eight of the suspicious gamblers and reported seven of them to the intelligence agency, according to the court documents.
"We have been dedicating significant investment and resources to transform our AML/CTF capabilities since being notified by AUSTRAC of its concerns," the group said in a statement at the time of the court filing.
The matter remains before the court.
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