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From gambling to laundering



The Australian casino business sector has been under intense scrutiny during the last three years following serious allegations of money laundering. However, the federal government has been talking about strengthening the country’s anti-money laundering (AML) and counter-terrorism financial (CTF) laws since 2015. Bart Puszko, Director of Lysis Australia stated that “The reason for this is the fact that the Financial Action Task Force (FATF) already criticised Australia’s existing AML and CTF laws in 2015.”


A troubled business sector


Australia’s largest casino group, Crown Resorts Limited had been exposed in 2021 by the regulator as unsuitable to operate a casino in the Barangaroo district of Sydney as well as in Victoria and Western Australia. They were found to have facilitated money laundering and partnered with operators that had links to organised crime. Therefore, they were ordered to pay a total of AUD $22.5m as part of measures set out by the New South Wales Independent Liquor and Gaming Authority (IGLA).


Fast forward to 2022, recent reports from Reuters indicated that the country’s second largest casino operator, Star Entertainment Group has also been found unfit to carry a casino licence in Sydney. This followed an inquiry into alleged violations of AML laws of Australia’s New South Wales (NSW) state gambling regulator which highlighted “systematic governance, risk and cultural failures” at the Star casino in Sydney.


According to the media report, the New South Wales Independent Casino Commission (NICC) indicated that large amounts of money were labelled by the casino as hotel expenses and evaded AML protocols on several occasions. The report also emphasised the risk of criminal infiltration and senior staff were accused of trying to hide their roles in the business operations.


The NICC introduced new legislation at the beginning of September 2022, whereby they can impose fines on casinos of up to A$100 million and fine individuals up to A$1 million for any violations of AML and CTF laws.


While this is playing out, there seem to be another ongoing investigation into a Star casino that operates in Queensland, Australia and according to a Reuters article, this might jeopardise the Star Entertainment Group’s plans to open a casino resort in Brisbane in 2023, at a projected cost of A$3.6 billion. Media reports also suggest that the two casino groups shared estimated profits of $600 million in 2019 and there seem to be a prominent perception that they are associated with crime because of their value and therefore remain lucrative sites for money laundering.


Taking control


Although money laundering is a serious global problem, credible statistics indicate that the value of illicit funds laundered through Australia every year, is estimated to be more than A$13 billion. This could explain why Australia has become one of the world’s most attractive places for money launderers.


According to Bart, “The anticipated Tranche 2 legislation for Australia can go a long way to curb criminal activities in specific business sectors but can also heighten the overall awareness of money laundering in all business sectors.”

He added that “Although casinos are already included in existing AML/CTF legislation, the new Tranche 2 legislation can help prevent money laundering and the financing of terrorism in Australia because laundered money are often used to purchase legitimate assets such as real estate. Tranche 2 legislation refers to a set of new regulations aimed at specific industries referred to as “gatekeeper industries”. The key “gatekeeper” industries that will be targeted by the legislation include real estate, law firms, and accounting. This legislation will also bring Australia’s AML/CTF regulatory framework in line with international standards set by the FATF.”


When asked what the short-and long-term implications of the Tranche 2 legislation will be on the targeted industries, and on the country, Bart stated “Over the short-term, there could be an increase in the awareness of how to identify potential money laundering activities which could lead to a surge in suspicious activity reporting to the Australian Transaction Reports and Analysis Centre (AUSTRAC). The long-term effect will be the improvement of the intelligence capabilities of Australia’s law enforcement, which will reduce the appeal of Australia’s current targeted industries, including casinos, as money laundering havens.”


Bart concluded by saying that “Reporting entities should conduct annual AML risk assessments. They should have an AML framework in place which includes standard operating procedures for screening, conducting due diligence and for the quality of reporting suspicious transactions. Through collaboration and standardisation of processes and controls, Australia’s gambling industry can establish itself as a major player in the fight against global money laundering.”


How Lysis can help


We have established a solid reputation as a global leader in the field of financial crime compliance. We deliver a unique and cost-effective combination of superior service offerings across the full spectrum of financial crime compliance including client on-boarding, ongoing monitoring screening support, Know Your Customer (KYC) remediation and refresh, transaction monitoring remediation and real-time alerts review and our award-winning managed services.



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