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The financial crime watchdog has launched civil proceedings against the most profitable club group in NSW for “serious and systemic” non-compliance with anti-money laundering laws that left it open to criminal exploitation.
AUSTRAC, the regulator of currency exchange services, announced on Wednesday civil penalty proceedings would be commenced against Mount Pritchard District and Community Club, also known as Mounties, over allegations the club failed to appropriately manage the risk of money laundering through its venues.
AUSTRAC identified specific instances where Mounties allegedly failed to monitor individuals who presented a money-laundering risk.Credit: Brook Mitchell
Mounties owns 10 venues across NSW, including eight that operate about 1400 poker machines, resulting in hundreds of millions of dollars in gambling revenue.
AUSTRAC chief executive Brendan Thomas said his agency had identified pubs and clubs as a medium-risk sector last year, but the danger increased when those businesses were exposed to cash, especially in circumstances where money laundering risks were not being managed.
“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,” Thomas said.
“A business operating at this scale, in a cash-intensive sector, is exposed to a high degree of money laundering risk.”
The NSW Crime Commission reported in 2023 that a significant proportion of the $95 billion that flowed through the state’s 87,000 poker machines in pubs and clubs the previous financial year was the proceeds of crime.
Its revelation prompted the then-premier Dominic Perrottet to announce the rollout of mandatory cashless gambling, but he lost power before he could fulfil the commitment.
His successor, Chris Minns, opted instead to test cashless technology before committing to a statewide rollout, but the trial attracted just 14 participants and the government is still sitting on a recommendation from its gambling reform panel to make cashless gambling mandatory.
Minns suggested last month that the government would not adopt the recommendation.
“Despite everybody’s best effort to have cashless gaming rolled out across NSW gaming, it’s largely proved to be ineffective,” he said.
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“It hasn’t worked, it’s not driven down the incidents of problem gambling, the take-up rate has been lower than we thought, the cost of compliance is enormous, astronomical.”
AUSTRAC alleged Mounties’ anti-money laundering and counter-terrorism financing program did not have adequate risk assessment, did not contain adequate staff awareness training and had weak transaction monitoring and due diligence processes.
It will also allege that Mounties failed to monitor specific customers appropriately despite the money-laundering risks they presented.
“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 customer’s source of funds,” Thomas said.
The Federal Court will now determine whether Mounties breached anti-money laundering and counter-terrorism financing laws and if so what penalties to impose.
Mounties has been approached for comment.
A spokesman for NSW Gaming Minister David Harris said the government would respond to the recommendations of the independent panel on gambling reform “in due course”.
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