The introduction of a mandatory cashless gaming card and improved data collection mechanisms are among eight recommendations by the NSW Crime Commission (NSWCC) after a multi-agency investigation found that billions of dollars of dirty money is being funnelled through the state’s pubs and clubs each year.
Following on from recent state-led inquiries into Australia’s casinos, which resulted in findings of unsuitability against Crown Resorts and Star Entertainment Group in four states, this latest investigation into money laundering via Electronic Gaming Machines (EGMs) – titled Operation Islington – concluded there are currently no effective controls or data collection to identify or prosecute those involved.
That’s despite AU$95 billion flowing through NSW pubs and clubs each year, more than any other Australian state.
“At the moment serious offenders can enter NSW pubs and clubs, sit down next to patrons in gaming rooms, and openly feed large sums of cash from their crimes into poker machines with no real fear of detection,” said NSW Crime Commissioner Michael Barnes.
“The lack of traceable data collected by EGMs means the exact scale of this criminal activity is impossible to determine but it is clear from our investigations it involves many billions of dollars every year.”
The investigation focused on two forms of money laundering – the use of EGMs to load, “clean” and then withdraw cash to hide its origin and that which involves criminals using “dirty” cash to gamble.
According to the report, cleaning money via EGMs is not widespread due to a lack of efficiency, however large sums of the proceeds of crime are being gambled by criminals in pubs and clubs across the state. As such, it concluded that allowing cash to continue to be used in EGMs makes it easy for criminals to gamble with illegally gained money.
It also identified an apparent lack of awareness by club boards, hoteliers and their staff of their anti-money laundering responsibilities.
“It is a deeply concerning peculiarity that in the largely cashless digital economy in which we live that gambling in NSW pubs and clubs remains a $95b a year information black hole. Clearly, that cannot be allowed to continue.”
The NSWCC has instead issued eight recommendations, as follows:
- Government introduce a mandatory cashless gaming system to minimise EGM related money laundering within pubs and clubs
- Government, in consultation with industry and regulators, create a legislative or regulatory framework requiring certain standardised data be maintained for EGMs to better flag suspected money laundering
- Government engage with industry to identify ways to enhance data collection and analysis, explore technical solutions and identify ways to create real-time alerts for money laundering flags
- Legislative and regulatory frameworks governing EGMs in NSW be amended to clarify that persons/entities with functions associated with EGMs must take steps to prevent money laundering
- Government introduce a mechanism that enables government agencies or venues to recommend the cancellation/revocation of an RCG certification 6
- Government engage with industry and regulators to create a legislative or regulatory mechanism to support the exclusion of persons suspected of dealing with proceeds of crime from venues with EGMs
- Government, in consultation with industry, update education requirements to include education on money laundering and increase the frequency of the training provided to venues
- Government work with industry to build the sector’s investment in AML/CTF training and education
Barnes said, “These basic reforms will help exclude vast sums of dirty cash that are primarily the proceeds of drug dealing. I’m sure venues won’t argue they should keep receiving that.
“The collaboration of the partners participating in this Inquiry has generated new insights that provide a sound evidence base for the recommendations contained in the report. The Government, stakeholders, and the public can have confidence that if implemented, these recommendations will reduce the impact of serious and organised crime in NSW.”
The investigation was jointly conducted by the NSWCC, the NSW Independent Liquor and Gaming Authority NSW, AUSTRAC and the Australian Criminal Intelligence Commission.
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