Ten suspicious gamblers punted $140m at a Sydney club. No one allegedly noticed

Mounties club group allegedly failed to take meaningful action against 10 customers who wagered $140 million through its poker machines while displaying classic money-laundering behaviour, such as inserting large sums of banknotes into its machines with little or no betting activity.

In a case that could have ramifications for venues across Sydney, a concise statement of facts released by AUSTRAC alleges that the state’s most profitable club group served innumerable customers without adequate controls in what was reflective of the “longstanding, systemic deficiencies” in its approach to anti-money laundering.

The financial intelligence agency has brought civil penalty proceedings against Mounties in the Federal Court for non-compliance with anti-money laundering and counter-terrorism financing laws.

“Mounties’ non-compliance ... meant that, over a prolonged period, there was a high risk of ML/TF [money-laundering/terrorism financing] occurring, involving very large sums of money ... and that risk was not addressed adequately or at all,” AUSTRAC claims in the concise statement.

“As a consequence of Mounties’ contraventions of the Act, the Australian community and Australia’s financial systems have been exposed to systemic ML/TF risk over many years.”

The claim will reverberate throughout the industry, and particularly among the 100-odd clubs that rely on BetSafe, the responsible gambling program used by Mounties, including big players such as Dooleys Lidcombe Catholic Club, Cabra-Vale Diggers, Panthers and the Norths group.

AUSTRAC alleges that BetSafe’s anti-money laundering program did not enable Mounties to understand, recognise, identify, mitigate or manage the money-laundering and terrorism financing risks that it reasonably faced as a business dealing in large amounts of cash.

The club group’s enhanced customer due diligence program, for patrons identified as high risk, is alleged to have been “vague and insufficiently detailed such that a person following the program could not logically follow the steps required to apply ECDD to a customer”.

AUSTRAC identified 10 “sample suspicious customers” who should have been subject to enhanced customer due diligence, including eight that Mounties had identified as engaging in suspicious play, seven that it had flagged with AUSTRAC and two who had not been identified but should have been due to their gambling being inconsistent with their reported source of wealth.

Each of them had exhibited suspicious behaviour such as frequent play, engaging in high turnover play at odds with their employment status, inserting large sums of notes with little or no betting activity and receiving numerous high-value payouts by cheque.

Some were alleged to have given or received cash from other patrons and collected tickets from, or given tickets to, other patrons to redeem them. Some had allegedly engaged in conduct that prompted investigations by Liquor and Gaming NSW.

They collectively wagered $139 million in turnover between 2019 and 2023, including reinvested winnings, and pulled out $10 million in payouts. But Mounties allegedly failed to monitor them, check their source of funds or review whether it should continue to deal with them.

“In spite of Mounties being aware of the high ML/TF [money laundering/terrorism financing] risk posed by the sample suspicious customers, Mounties either failed to consider whether ongoing business relationships ought be maintained with the customers or concluded that ongoing business relationships ought be maintained notwithstanding the ML/TF Risk posed by the customers,” AUSTRAC alleged.

“[Electronic gambling machines] constitute a money laundering risk because they primarily accept cash and because cash continues to be the primary method by which criminals obtain wealth from dealing in illicit commodities.”

Over the four-year period under examination, Mounties’ customers staked $4 billion on poker machine gaming, and the club group pulled in revenue of $459 million.

Mounties was approached for comment. It said in a statement last week that it had co-operated with AUSTRAC throughout the investigation and continued to work constructively with the regulator.

“As a matter of priority, we are reviewing AUSTRAC’s originating application and concise statement, relating to alleged contraventions of our obligations to maintain a compliant program and conduct appropriate ongoing due diligence of customers,” the statement said.

“We take our anti-money laundering obligations seriously and have been dedicating significant investment and resources to transform our AML/CTF capabilities since being notified by AUSTRAC of its concerns.”

ClubsNSW said it continued to work with AUSTRAC to ensure that anti-money laundering risk controls were adequately managed.

“ClubsNSW recommends that member clubs exercise care and diligence when utilising the services of third-party providers to help meet their AML/CTF compliance obligations and that they have their AML/CTF programs regularly reviewed by an independent entity,” the statement said.

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