How your local pub could be involved in money laundering
A multi-agency investigation has found that criminals are funnelling billions of dollars of “dirty” cash through poker machines in pubs and clubs every year in NSW (NSW Crime Commission October 20221)
Most people that own or work in pubs and clubs are people we know and like, who are honest, decent citizens.
They just don’t get how their pokies can be used – very likely are being used – to launder criminal money.
Some things to know about money laundering
- It can happen on a grand scale or on a small scale
While there can be industrial scale money laundering – in some parts of the world there are complete underground financial systems to handle the funds – there ae also money laundering activities carried out by local individuals.
“Money mules” are ordinary people who get a job – maybe by tearing off a piece of paper from a job ad stuck to a light post. They might be asked to receive some cash and deposit it into a bank account. They might be asked to take some cash to the local pub and play the pokies.
That’s how money laundering in pubs and clubs flies under the radar.
- It involves splashing the cash
Money laundering can cost a lot – if a criminal wants to launder $100,000 they might have to throw away even as much as half of that, for example on losing bets or on payments to mules and other operators.
While most people would be horrified at losing that much money, from the criminal’s point of view, 100,000 useless dollars is now 50,000 usable dollars – they are $50,000 ahead.
Until you understand this you’ll never really understand the problem that money laundering poses.
- Anyone can be a money mule
It could be a pack of bikies turning up at your local RSL for a session on the pokies or it could be a busload of pensioners.
Or it could be a tourist who’s sneaking cash out of their home country, to launder it in a pub in Bathurst or Wagga Wagga, and take it home as nice, clean winnings.
- Money laundering is evil
Some money laundering is about tax evasion – people who get paid in cash needing to find a way to use that money without the tax office getting suspicious. Which is bad enough.
But more often it’s the proceeds of
- Drug dealing
- Car theft and rebirthing
- Extortion
- Bribery of police and public officials
- Modern slavery and people trafficking
- Scams, fraud, and identity theft
Scams, fraud, and identity theft
We all know that scams, fraud and identity theft are a very significant problem. But stop for a minute and ask, when those criminals stole that money out of my auntie’s bank account, or ripped me off with a fake Facebook Marketplace deal, what did they do with the money?
They probably laundered it.
Through the pokies at a local pub or RSL.
Or they bought drugs with it, or a rebirthed car. And the dealer laundered it.
So how do criminals or their paid helpers launder money through the pokies?
- Deposit a heap of cash into a machine, play a few games, and then cash out the remaining credits. There are much more efficient ways of laundering money than this, but for a small-scale operation the simplicity of this method can be attractive, and if a number of operators are working together, substantial sums can be handled.
- More frequently, criminals just gamble the dirty money. Sometimes just for fun, but also to pocket the genuine winnings. In NSW, poker machines must pay out 85% of what people put into them.2
Method 1 is obviously a money-laundering risk. Method 2 is not so obviously a money laundering risk.
Method 1 doesn’t offer much profit to the owner of the pokies. Method 2 looks just the same as pubs and clubs day to day business. Management keeps on average 15% or what goes into the machines. (That’s why Anti-Monely Laundering training is really important.)
Whatever method is being used, it amounts to billions of dollars a year in NSW alone.
In March 2024, Brad Brown, Manager of Regulatory Operations at AUSTRAC (the Australian agency tasked to fight money laundering and terrorism financing, among other things) said pubs and clubs have demonstrated a lack of understanding about how pokies can be used to launder money.
We have concerns in pubs and clubs with electronic gaming machines around the identification of risks. Many clubs, pubs and clubs are continuing to be reliant on manual transaction monitoring.
We have concerns around a lack of understanding about the risk posed in the sector more generally. In particular, the main risks that were called out by the New South Wales Crime Commission’s Project Islington, which exposed spending and lifestyle considerations and activities. That is: persons gambling the proceeds of crime.3
In respopnse to this problem, AUSTRAC hass announced a major project to work with the induhstry to improve it’s compliance.4
Austrac will also be carrying out “targeted checks”
Notes
2 Gaming Machines Regulation 2019 S11
3 Article here
4. News report: AUSTRAC enhances collaboration with gambling industry
GRC Solutions Resources
- Anti-Money Laundering online training – covering the responsibilities of financial services and other businesses in general
- AML/CTF online Training for Finance Sector – covering the particular responsibilities of ADIs
- Financial crimes resources – training, consultation, advice – see here