Australia’s anti-money laundering watchdog AUSTRAC has revealed that a record number of Suspicious Matter Reports (SMRs) were filed by the country’s expansive pubs and clubs sector in the month of February, suggesting strong awareness of their AML responsibilities ahead of 31 March, when the regulator’s new AML/CTF framework rolls out.
However, in a keynote address delivered at the Regulating the Game conference in Sydney on Wednesday, AUSTRAC CEO Brendan Thomas also outlined “systematic weaknesses” that continue to be identified across the sector and which criminals remain able to exploit.
In a detailed address through which he outlined the many successes and challenges AUSTRAC has encountered over the past year, Thomas said he had seen significant improvement across Australia’s casino sector following a series of enforcement actions in recent years, while pubs and clubs – home to over 170,000 electronic gaming machines nationwide – were also engaging more proactively.
“We’ve had some enforcement actions there but in terms of suspicious matter reporting across the pubs and clubs sector, we’ve seen more SMRs this year than ever before and that’s a really positive improvement,” Thomas explained.
“February was the highest number of SMRs we’ve ever received from the pubs and clubs sector. So, if the people involved keep it up, that’s a really encouraging sign.”
Despite this, Thomas said there is still a long way to go for many venues.
“What we’ve seen is not a collection of one-off failures. We’ve seen recurring patterns, systemic weaknesses that criminals have exploited repeatedly and often exploited for long periods of time,” he stated.
“One persistent risk involves high-value, high-frequency cash transactions across multiple venues. We’ve seen customers move extraordinary volumes of cash, sometimes millions of dollars, through deposits and withdrawals.”
The use of prepaid cards and vouchers remain a common method used obscure the source of their funds, Thomas added, while techniques like “bill stuffing” – large cash deposits with minimal gameplay – continues to be used to convert illicit cash into seemingly legitimate winnings. Other recurring themes include multiple accounts, third parties and synthetic identities designed to make it difficult to identify the true owner of funds.
“These behaviors were visible, repeatable and highly indicative of money-laundering risk,” he said.
Some venues have also fallen short in completing effective source of wealth checks even when customers have deposited large sums, and in preventing customers with known criminal histories from continuing to transact.
Thomas noted that the challenge of disrupting money laundering is not unique to Australia but observed that the country does present an attractive destination for criminals seeking to store and to integrate the proceeds of their crime because of its stable political system, open economy, independent legal system and highly developed financial and gambling sector.
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