Money laundering through pokies: AML/CTF obligations for clubs

Jasmin Van Gorp
Workplace Relations and Compliance Advisor
Currently on maternity leave


Money laundering and terrorism financing are global problems that have direct social and economic impacts on Australia. A lesser-known method of enabling these crimes is through exploiting clubs which operate electronic gaming machines (EGMs).

Proceeds of crime are often in the form of cash. Criminals are very aware to take advantage of the cash intensive nature of clubs, combined with the anonymity and ease of access afforded, to launder illicit funds. Clubs which operate EGMs may be exploited by criminals to launder proceeds of crime. It is pertinent for these businesses to be aware of and comply with their Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations or risk facing enforcement action, which may include substantial fines.

What is money laundering and terrorism financing?

Money laundering is the process by which criminals take illicit funds from activities such as drug trafficking, illegal firearms sales, human trafficking and other illegal activities and attempt to make the illicit funds appear legitimate.

It involves the process of disguising or hiding the origin of illicit funds (dirty money) to make those funds appear legitimate (clean money).

The term terrorism financing includes the financing of terrorist acts, and of terrorists and terrorist organisations.

Funds for terrorists can come from a range of legitimate and illegitimate sources and can be linked to organised criminal groups. The sources may include the provision of any kind of asset in any form, including but not limited to, bank credits, bank cheques, bonds, money orders and securities.

Who does AUSTRAC Regulate?

AUSTRAC is Australia’s AML/CTF regulator and financial intelligence unit. AUSTRAC regulates sectors and businesses (including the gambling sector) which have been identified as posing a risk for money laundering and terrorism financing. This is done by imposing a number of obligations on the sectors and businesses (known as reporting entities) that provide particular services (known as designated services).

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), and the Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/ CTF Rules) aim to prevent money laundering and the financing of terrorism.

Obligations for Clubs with EGMs

The obligations for your club will depend on the number of EGM entitlements you have under licence to operate (regardless of how many are actually operating at the time).

If your club has entitlements under licence to operate 15 or less EGMs, you may be exempt from many obligations. To determine if your business is exempt, you must meet the requirements in Chapter 52 of the AML/CTF Rules.

If your club has entitlements under licence to operate 16 or more EGMS, you should:

Enrol with AUSTRAC

You must enrol with AUSTRAC within 28 days from when you first allow a person to play on an EGM.

Criminals are very aware to take advantage of the cash intensive nature of clubs, combined with the anonymity and ease of access afforded, to launder illicit funds.

Keep enrolment details up to date

You must notify AUSTRAC within 14 days of any changes to your enrolment details.

Keep certain records

Keeping records will help you manage the risks of your business or organisation being exploited for ML/TF.

Appoint a compliance officer

Your club’s AML/CTF compliance officer is responsible for making sure you meet your AML/CTF obligations.

Conduct and maintain an ML/TF risk assessment

You must complete a risk assessment to identify the money laundering and terrorism financing risks your club faces.

Adopt and maintain an AML/CTF program

An AML/CTF program must be a written document that sets out your business’s policies and procedures to comply with your AML/CTF obligations.

Carry out customer due diligence (Know Your Customer) procedures

Know Your Customer involves collecting details from the customer, and then verifying those details against reliable and independent sources such as a driver’s licence, a passport or through e-verification.

Implement and maintain ongoing customer due diligence

You must develop, implement and document procedures for ongoing customer due diligence Undertake regular independent reviews of part A of the AML/CTF program An impartial assessment that checks your business is complying with its program.

Submit suspicious matter reports (SMR)

You must submit an SMR if you suspect that the customer is not who they claim to be, or the customer or the transaction is related to ML/TF, proceeds of crime etc.

Submit threshold transaction reports (TTR)

A TTR must be submitted within 10 business days after the day the transaction takes place.

Submit annual compliance reports

The compliance report is an annual report that includes questions about how you have met your AML/CTF obligations during the previous calendar year.

Failure to meet your obligations

If you fail to meet your obligations, AUSTRAC has a range of enforcement actions available to it, such as remedial action, infringement notices, written notices, enforceable undertaking to AUSTRAC and a civil penalty order. You are also potentially placing your business and community at greater risk of harm from ML/TF and other serious crimes.

All your gaming staff, including management and owners, need to be aware of your AML/CTF risks and take steps to mitigate and manage them. It’s important to remember that a business of any size could be exploited by criminals, and potentially used to commit crimes. AUSTRAC provides a detailed guide for clubs to ensure that they understand and comply with their AML/CTF obligations. The guide is available from the AUSTRAC website (www.austrac.gov.au).

If Clubs have any questions, they are encouraged to contact the Workplace Relations and Compliance Team on 07 3252 0770.