Australian AML watchdog AUSTRAC has launched Federal Court civil penalty proceedings against one of the country’s largest clubs, Mount Pritchard District and Community Club – better known as Mounties – for alleged serious and systemic non-compliance with the country’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.
In a statement issued Wednesday, AUSTRAC alleged that Mounties contravened the AML/CTF Act by providing gaming services to its customers in circumstances where it had not adopted and maintained an AML/CTF program in compliance with the relevant rules.
Such failures have, AUSTRAC CEO Brendan Thomas explained, left Mounties open to criminal exploitation.
“Mounties is one of the largest and most profitable club groups in NSW. It owns 10 venues, eight of which operate approximately 1,400 poker machines and it makes hundreds of millions of dollars in revenue from money gambled on those machines,” Thomas said.
“This is a big company with an even bigger responsibility to ensure its clubs are managing the risks that criminals can run dirty money through its gaming machines.
“AUSTRAC’s 2024 Money Laundering in Australia National Risk Assessment identified pubs and clubs as a medium risk sector, but when those businesses are exposed to cash, especially in circumstances where known money laundering risks are not being managed, the risk increases.”
“A business operating at this scale, in a cash intensive sector, is exposed to a high degree of money laundering risk. In 2022 for example, the NSW Crime Commission released its Project Islington report which determined that billions of the approximately AU$95 billion gambled in NSW poker machines in 2021-22 was likely to be dirty money.”
AUSTRAC’s allegations include that Mounties’ AML/CTF program did not have an adequate risk assessment; did not contain appropriate staff risk awareness training; did not contain appropriate risk based systems and controls in its transaction monitoring program; did not include appropriate risk based systems and controls in its enhanced customer due diligence processes; was not subject to an independent review that met the requirements of the rules; and that Mounties failed to appropriately monitor a number of its customers with a view to identifying, mitigating and managing the money laundering risk that Mounties faced.
AUSTRAC also alleges Mounties failed to appropriately maintain its AML/CTF Program, with aspects of its program outsourced to a third-party provider, Betsafe – which also provides AML/CTF programs to a number of other pubs and clubs.
“Like many other AUSTRAC reporting entities, Mounties outsources aspects of its AML/CTF program but what it can’t outsource is its AML/CTF obligations,” Thomas said.
“Relying on third party providers doesn’t absolve a business of its obligations under the AML/CTF Act. If a reporting entity outsources key parts of its program to a service that is not fit for purpose – especially without proper oversight or resourcing – they run a real risk of non-compliance.
“All reporting entities, regardless of size, must stay actively involved in how their AML/CTF program is designed, implemented and monitored and I would say the same thing to other pubs and clubs who think bringing in a provider is a set and forget solution.”
The Federal Court of Australia will now determine whether Mounties contravened the Act and, if so, what orders to make, AUSTRAC explained.