Civil proceedings target systemic breaches in anti-money laundering compliance
AUSTRAC Alleges Widespread Non-Compliance
Australia’s financial crime regulator, AUSTRAC, has initiated civil penalty proceedings against Mount Pritchard District and Community Club (Mounties), accusing the operator of serious and ongoing failures to comply with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
Mounties operates 10 venues in New South Wales and manages around 1,400 poker machines, generating hundreds of millions of dollars annually. According to AUSTRAC, the club failed to maintain an AML/CTF program that met statutory standards, leaving significant gaps in its compliance framework.
Key Allegations: Poor Monitoring and Risk Oversight
The regulator’s investigation identified multiple deficiencies, including:
Inadequate customer risk assessments and failure to monitor high-risk transactions.
Weak internal controls that failed to detect suspicious activities.
Insufficient staff training and lack of oversight over outsourced compliance functions.
While Mounties had outsourced parts of its AML/CTF obligations to a third-party provider, AUSTRAC emphasized that ultimate responsibility rests with the reporting entity. Failure to supervise external providers, particularly in cash-heavy sectors like gaming, amplifies the risk of criminal exploitation.
Money Laundering Risks in Poker Machine Operations
The allegations come amid rising concerns over the vulnerability of poker machines to money laundering. In New South Wales alone, approximately AU$95 billion (US$63.7 billion) was gambled on poker machines in 2021–22, with authorities estimating that billions of this amount were potentially proceeds of crime.
AUSTRAC highlighted specific cases where customers were neither assessed nor monitored adequately, undermining the integrity of the gambling sector and exposing it to serious criminal infiltration risks.
Industry Implications and Regulatory Crackdown
The Federal Court will now decide whether Mounties breached AML/CTF obligations and determine the penalties to be imposed. This case adds to AUSTRAC’s increasingly aggressive enforcement actions against gaming operators that fail to uphold compliance standards.
The regulator has warned that outsourcing compliance functions is not a defence and urged all clubs and casinos to review their AML/CTF programs to avoid similar action.
Conclusion: A Wake-Up Call for the Gaming Industry
The proceedings against Mounties underscore AUSTRAC’s zero-tolerance approach to non-compliance and send a clear message: strong internal controls and active oversight are non-negotiable. As Australia’s gambling sector faces mounting scrutiny, operators must prioritise robust compliance frameworks to safeguard against financial crime and regulatory penalties.
1 Comment