AUSTRAC takes poker giant Mounties to court over AML failings???
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has initiated civil penalty proceedings in the Federal Court against Mount Pritchard District and Community Club, commonly known as Mounties, citing alleged serious and systemic non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
According to AUSTRAC, Mounties provided gaming services in circumstances where it had not adopted and maintained an AML/CTF programme in compliance with the AML/CTF Rules.
AUSTRAC CEO Brendan Thomas said the clubs failure to meet its obligations left it vulnerable to criminal misuse. Mounties is one of the largest and most profitable club groups in NSW. It owns 10 venues, 8 of which operate approximately 1,400 poker machines, and it makes hundreds of millions of dollars in revenue from money gambled on those machines, Thomas said.
This is a big company with an even bigger responsibility to ensure its clubs are managing the risks that criminals can run dirty money through its gaming machines.
Mounties allegedly failed to manage money laundering risks
AUSTRACs case includes several allegations about inadequacies in the Mounties AML/CTF programme. The agency stated that the club was unable to implement basic requirements, including an adequate risk assessment, proper staff training, and effective transaction monitoring systems.
The regulator also claims Mounties failed to appropriately monitor a number of its customers with a view to identifying, mitigating and managing the money laundering risk that Mounties faced. In particular, AUSTRAC alleges that the club failed to monitor specific customers, despite the money laundering risks they presented.
Outsourcing compliance not an excuse, says AUSTRAC
The Mounties AML/CTF programme was reportedly outsourced to Betsafe, a third-party provider that services several other pubs and clubs. However, Thomas stressed that outsourcing does not relieve a reporting entity of its legal responsibilities.
Like many other AUSTRAC reporting entities, Mounties outsources aspects of its AML/CTF programme, but what it cant outsource is its AML/CTF obligations, he said. Relying on third-party providers doesnt absolve a business of its obligations under the AML/CTF Act. If a reporting entity outsources key parts of its programme to a service that is not fit for purpose C especially without proper oversight or resourcing C they run a real risk of non-compliance.
All reporting entities, regardless of size, must stay actively involved in how their AML/CTF programme is designed, implemented, and monitored, and I would say the same thing to other pubs and clubs who think bringing in a provider is a set and forget solution, he added.
Industry warnings and broader risks
Thomas noted that clubs operating poker machines carry a heightened risk of money laundering, particularly when large volumes of cash are involved.
AUSTRACs 2024 Money Laundering in Australia National Risk Assessment identified pubs and clubs as a medium risk sector, but when those businesses are exposed to cash, especially in circumstances where known money laundering risks are not being managed, the risk increases, he said.
He cited earlier findings by the NSW Crime Commission to highlight the scale of the problem. In 2022, for example, the NSW Crime Commission released its Project Islington report, which determined that billions of the approximately AUD95 billion (53.7 billion) gambled in NSW poker machines in 2021-22 was likely to be dirty money.
Mounties, by its size and the volume of cash transactions it handles, is seen by AUSTRAC as being particularly exposed. A business operating at this scale, in a cash-intensive sector, is exposed to a high degree of money laundering risk, Thomas said.
Customer due diligence and transaction monitoring in a club that processes hundreds of millions of dollars a year through its poker machines, a significant amount of which is cash, is going to require a robust approach when it comes to verifying a customers source of funds, he added.
Federal Court to decide outcome
It is now up to the Federal Court to determine whether Mounties has contravened the AML/CTF Act. If breaches are established, the court will determine the penalties or other orders to be imposed.
AUSTRACs enforcement action forms part of its broader strategy to ensure that clubs, pubs, and other high-risk sectors do not become conduits for money laundering.
