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Australia’s financial transactions regulator has issued a three-year forecast for money laundering vulnerability that rates the gambling sector overall as stable and medium risk.
AUSTRAC on Tuesday (July 9) released dual reports on money laundering and terrorism financing in Australia, with the former document breaking down risk in six gambling industry segments.
Despite years of government inquiries, heavy fines, suspended licences and purged boards and management teams, casinos topped the AUSTRAC risk list.
Casinos are rated as “posing a high and stable money laundering vulnerability”, the report said.
“Despite sustained regulatory and law enforcement efforts, casinos continue to be exploited for large-scale money laundering by sophisticated criminal entities and small-scale opportunistic offenders,” it said.
The impact of anti-money laundering and counter-terrorism financing (AML/CTF) “programs and associated detection capabilities are uneven across the sector”, it said.
“Therefore, casinos’ ability to detect and report suspicious matters and mitigate their risks varies.”
Although the precise vulnerabilities of casinos listed in the report are nothing new, it said the adaptiveness of criminal elements will mitigate against state government reforms and deterrents in the post-inquiry gambling environment, an era triggered by a 2019 media probe into Crown Resorts and its casinos.
“The casino sector will continue to pose a high money laundering vulnerability over the next three years, despite sustained regulatory and law enforcement disruption efforts,” the report said.
“As the impact of regulatory and supervision reforms become more apparent and individual casino AML/CTF systems and controls mature, criminal exploitation will almost certainly evolve in response.
“Ongoing monitoring and assessment of the sector’s resilience to criminal exploitation will be important in understanding the trajectory of this risk.”
However, the risk posed by casino junket activity was rated the lowest of all gambling segments, sharing the “low to medium risk” rating of on-course bookmakers.
Junkets serving foreign VIPs have been heavily restricted or banned in the wake of media and inquiry revelations of extensive criminal activity in junket operations in Sydney and Melbourne.
The report did not acknowledge this policy change or suggest that the junkets’ retreat from the Australian market affected their risk rating.
Instead, AUSTRAC declared that corporate bookmakers/betting agencies, slot machine and electronic betting terminal (EBT)-hosting pubs and clubs, as well as largely unregulated foreign gambling websites, pose a “medium and stable risk” of money laundering.
The three segments, whose online or decentralised gambling environments have generated strong growth in recent years, feature a lesser degree of criminal exploitation, the report said.
However, online sports-betting channels “are highly exposed … . They are easy to access, process a high volume and value of transactions, and service high-risk customers”, although “proceeds of crime are being spent predominantly for lifestyle choices”.
Various state governments are introducing or trialling account-based, non-cash electronic betting and mandatory pre-commitment measures, but until these are introduced, “cash betting through EBTs will almost certainly remain a specific point of vulnerability and exploitation in the broader bookmaking sector”, the report said.
AUSTRAC’s wider assessment of slot machines in pubs and clubs backed the New South Wales Crime Commission’s finding that money laundering in this segment is not pervasive but significant when it occurs.
“The true extent of money laundering through pubs and clubs is an intelligence gap. However, it is likely that they are used by a small number of criminals laundering large amounts of illicit funds,” it said.
Finally, the report is speculative on the risk posed by offshore gambling websites, which are prohibited from targeting Australian customers but are not illegal to use.
The segment’s “opaque settlement channels”, including digital currencies, fall outside Australian AML/CTF controls and such websites boast a “demonstrated resilience to disruption”, it said.
This sector will remain vulnerable given this opacity, settlement channel accessibility and their capacity to “move funds between parties at scale”, it said.
“However, it will likely not be as attractive as other gambling channels to money launderers because of the required level of sophistication and specialist knowledge and skills required.”
AUSTRAC is completing a sequence of major investigations into land-based casinos, with a massive fine expected for The Star Entertainment Group after the regulator punished Crown Resorts and SkyCity Entertainment Group.
The regulator is also assessing compliance failures by various corporate bookmakers, although market leader Sportsbet, a Flutter subsidiary, escaped a fine at the end of its probe.
AUSTRAC has now expanded its investigations into slot machine and other gambling activity in pubs and clubs, a segment that withstood high-level federal or state government scrutiny until the last few years.
