Authorities in Australia aren’t playing around as they attempt to identify any operators cutting corners, and even the pubs and clubs sector hasn’t been immune. But in regards to money laundering, it appears that the risk level is much lower for the venue operators, even though authorities are stepping up oversight.
Australia’s financial watchdog recently issued its annual report on money laundering, highlighting casinos as having a ‘high and stable money laundering vulnerability’, while rating pubs and clubs as ‘medium and stable’ and corporate bookmakers as ‘medium and stable’.
According to the Australian Transaction Reports and Analysis Center (AUSTRAC), there are some 4,103 pubs and clubs enrolled with the watchdog (as of May 2024), and authorities have been working hard to eliminate gambling harm and possible exploitation of the venues.
Despite this, the authority still finds that ‘pubs and clubs are likely used by a small number of criminals to launder funds at scale […] they present a money laundering vulnerability as illicit funds can easily be transferred between various gambling formats in one venue. This can complicate tracking and tracing of fund movements’.
AUSTRAC noted that money laundering methodologies through the venues involve ‘high-volume cheque payouts, machine payouts with little or no play, collecting the machine credit in the for of a ticket, cheque payout or funds transfer, cheque-buying, collecting payouts from EGMs played by third parties’ and ‘buying and selling winning tickets’.
EGMs pose a low risk
Gaming industry veteran Geoff Wohlsen indicates his agreement with the watchdog’s evaluation that Electronic Gaming Machines (EGMS) being operated at the pubs and clubs venues “probably don’t pose a high risk for large-scale money laundering”.
“First, the cash load limits make it very difficult for large-scale high volume laundering. Secondly, even large clubs in New South Wales operating large installations over say 400 machines tend to know their customers now and compliant venues are right onto potential suspicious actions. Pubs operate smaller and more intimate installations and it’s easier to patrol player activity,” indicates the co-founder of Wohlsen Consulting.
AUSTRAC indicates in its report that pubs and clubs ‘money laundering vulnerability ‘primarily stems from a high volume and value of transactions (including cash transactions) and exposure to high-risk customers’.
But Wohlsen notes this can be quite easily identified.
“The most vulnerable aspects of EGM operations in pubs and clubs were rightly identified in the report as including the secondary market for winning vouchers and anonymous card cash loading. Effectively a perpetrator might be tempted to load several cards with cash and effectively use player cards as de facto cash. But venue systems will show this pattern pretty quickly and CCTV should identify those people who are loading up”.
Despite these assurances, and AUSTRAC indicating that ‘large-scale money laundering through EGMs, while occurring, is not widespread’, it still highlights that ‘the true extent […] is an intelligence gap’.
‘However it is likely that they are used by a small number of criminals laundering large amounts of illicit funds’ and that ‘pubs and clubs will continue to pose a medium money laundering vulnerability over the next three years’.
So, is the watchdog likely to crack down further on the operators, increasing oversight?
“I think AUSTRAC will be far more active in pubs and clubs than they have been to date. We have over 4,000 registered venues offering gaming facilities, so it’s a large, diversified spread of venues. No doubt AUSTRAC might start at the large pub groups first with corporate offices and then move to the large club environment as well as focusing on high-risk areas of Australia,” indicates Wohlsen.
