Australian pubs and clubs face tighter scrutiny as AUSTRAC strengthens AML and CTF regulations.

Australian pubs and clubs are coming under increasing scrutiny following the release of the Project Islington reporting October last year. The joint law enforcement agency inquiry led by the NSW Crime Commission reported that criminals were gambling their proceeds of crime through poker machines without effective controls or data collection to prosecute those involved.

The inquiry found that billions of dollars gambled through NSW poker machines were the proceeds of organised crime and recommended the introduction of a mandatory cashless gaming card that will minimise money laundering by removing the anonymity of transactions and allow them to be traced.

Clubs NSW and the Australian Hospitality Association (AHA) argued that such a card wasn’t necessary and it would only harm the industry. However, this contradicts a story by the Sydney Morning Herald that NSW’s 95,000 poker machines were being used as laundering machines for illicit cash that is “easily in the hundreds of millions” of dollars.

While the Project Islington investigation covered NSW, it’s almost certain that all states that allow pokies, such as Victoria, face similar issues.

The Project Islington report has put pubs and clubs across the country even further in the spotlight of the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The regulator started an education campaign in 2022 to raise awareness about the importance of anti-money laundering, combating the financing of terrorism, and the completion of compliance assessments as a precursor to an anticipated crackdown.

‍

AML/CTF obligations for pubs and clubs

Under AML/CTF laws, pubs and clubs are required to report transactions and suspicious activities to AUSTRAC and take steps to prevent their business from being used by criminals. Their specific obligations depend on how many electronic gaming machines (EGMs) they are licensed to operate.

Businesses licensed to operate 15 or less EGMs must:

·      Enrol with AUSTRAC

·      Keep enrolment details up to date

·      Keep certain records

·      Submit suspicious matter reports.

Businesses licensed to operate 16 or more EGMs must comply with the requirements above and must also:

·      Appoint a compliance officer

·      Conduct and maintain an ML/TF risk assessment

·      Adopt and maintain an AML/CTF program

·      Carry out customer due diligence (Know Your Customer) procedures

·      Implement and maintain ongoing customer due diligence

·      Undertake regular independent reviews of the AML/CTF program

·      Submit threshold transaction reports

·      Submit annual compliance reports.

Even if a business operates less than 16 EGMs, the more extensive obligations will apply if they are licensed to operate 16 or more.

‍

How One AML can help pubs and clubs meet AML/CTF obligations

As AUSTRAC continues its inquiry into the Pubs and Clubs sector, it is clear that the Australian government is committed to safeguarding the country's financial system from the risks associated with money laundering and terrorism financing.

While pubs and clubs are central to Australian culture, they must adapt to stricter AML and CTF regulations. Compliance will protect them from regulatory penalties and contribute to a safer and more secure financial environment.

One AML removes the stress associated with AML/CTF compliance by making the independent review process or helping you set up your AML/CTF program seamless, straightforward and cost-effective. Our expert consultants advise and recommend all AML/CTF requirements and obligations.

Contact us today for a free, no-obligation consult to find out how we can help.