Thank you for the invitation to speak to you today, here on Gadigal land. 

If there are any elders present, I extend my respects to you. I acknowledge the traditional owners of the land and their unbroken connection to country. 

I also acknowledge past and future leaders. As a Wiradjuri man I am proud to be living purposefully, serving the Australian community.

I’m proud of AUSTRAC’s role in working towards safeguarding our community, preventing crime and ensuring we have a secure financial system and businesses that can operate on a crime-free level playing field.

But we can’t take our eyes off the ball on this. Criminal ingenuity never ceases to amaze me and some industries, like the gambling industry, are frequently at the coalface of criminal infiltration. 

Today I want to talk to you about preventing your business from being exploited by criminals. I know everyone here wants to run a legitimate business and provide a successful product, but many criminals are a step ahead of you and if you let your guard down, they will get in.

Imagine running a multi-million dollar business and having little knowledge or interest in the legal obligations you’re expected to adhere to. Imagine running a business and not investing in the money laundering controls needed to protect that business from crime. Or worse, imagine running a business that relies on dirty money and turning a blind eye to crimals infiltrating that business, for the benefit of profit. It might sound hard to believe but these are some of the failings AUSTRAC has observed in the gambling sector. This is no way to run a legitimate and sustainable business.

Serious and organised crime costs Australia more than 68 billion dollars a year - that’s according to the Australian Institute of Criminology. We all have role to play in stamping out illegal activity and preventing the harm it’s causing the community. And it is causing harm. Money-laundering funds are generated by the very worst criminal behaviour and those funds are reinvested back into that behaviour, creating a thriving criminal underworld.

The value of the domestic illicit drug market alone is worth at least $12.4 billion dollars per year. Not only that, we estimate tax fraud to range from between $1.8 and $6.3b a year, more than $2b in scam proceeds. – All this money then needs to be laundered through the Australian economy, every single year. Australia is also a very attractive place for international money laundering syndicates to launder proceeds of foreign crime also. 

The people who do that are persistent, innovative and professional. Not only do we deal with international crime networks but we are dealing with international money laundering organisations. That is, criminal organisations that just specialise in money laundering. They bid against each other for work and they consistently look for holes in our regulatory controls so they can launder money through them. 

That’s why we are tireless in ensuring businesses are alert to their risks and have effective and working controls in place. AUSTRAC has a dual remit: we are Australia’s anti-money laundering and counter-terrorism financing regulator as well as Australia’s financial intelligence unit. We play an integral role in safeguarding the Australian community and the economy. But so do you. 

Your suspicious matter reporting and know your customer processes help us detect, deter and disrupt serious and organised crime, so that we can build resilience against criminal exploitation in legitimate businesses and financial markets. 

The challenges to the gambling industry include the digitisation of currency, financial systems that are more dispersed and complex, the need for more sophisticated customer verification processes, and competition from other players in a rapidly evolving online sector.

All these things put your businesses under pressure. But if you don’t take your obligations seriously, if you don’t look out for the gaps where the dirty money can get in, the criminals will exploit you. And that’s what I want to talk to you about today.

I’ve been the CEO of AUSTRAC for just over a year and I’m so proud of the work we’ve done in that time to reduce harm in the community. While we’ve been working with industry and our reporting entities to reduce that harm, AUSTRAC is not in the business of continuous education without action. 

It’s important that businesses understand their legal obligations because I'm prepared to take strong and swift action where it's warranted.

There's no question about where the funds come from and how those funds are impacting Australians. There’s the crime that led to the profits in the first place – and the reinvestment of those profits into more crime. At the worst end of the scale we’re talking about drugs, scams, child exploitation and significant amounts of human trafficking. So if you are operating a gambling business you’ve got a pretty big responsibility.

AUSTRAC uses a range of regulatory tools and powers to promote compliance and we tailor our approach based on the level of risk posed by the entities we regulate and their circumstances in their industry. 

In some cases we can focus on education, or collaboration with a business. Or if a business publicly recognises its deficiencies and shows a commitment to addressing the issues, AUSTRAC may accept an enforceable undertaking as we have in the gambling industry. 

Sometimes a campaign targeting a specific sector, is needed. A couple of years ago, AUSTRAC launched a corporate bookmaker campaign focusing on some of the largest online bookmakers in Australia. We found that many of the bookmakers had only a basic understanding of their money laundering risks, and because of that, they didn’t have appropriate controls in place to identify or manage those risks. 

As a result of the lack of controls, we found a number of customers had gambled with illegally obtained money. For example we found financial advisers using other people’s money to fund their gambling habits. But thanks to that campaign, there are now better systems and controls in place at a number of bookmakers and this dodgy activity, which clearly harms the community, is far more likely to be detected and reported to AUSTRAC. 

With cases where we find serious non-compliance, we will apply for a civil penalty and as you can see in recent years, court action has led to some significant fines. So AUSTRAC is more than happy to work in cooperation with businesses that are doing the right thing, but because of the harm that money laundering and organised crime causes the community, it can require us to take that kind of swift action.

I’ll state the obvious here: there’s a significant risk of money laundering in the gambling sector. 

We launched our Money Laundering National Risk Assessment last year. If you read it you would have seen our assessment of the gambling sector. Casinos pose a high money laundering risk and betting agencies, corporate bookmakers, and pubs and clubs are assessed as posing a medium risk for money laundering.

Despite sustained regulatory and law enforcement efforts, casinos continue to be exploited for large-scale money laundering – and that’s because they are exposed to a wide range of vulnerabilities and aspects of their operating models make them very attractive to criminals.

Casino risks come as no surprise to anyone here. But some of the issues we’re seeing across the sector in other businesses include:

• Anonymous individuals and high-value customers who are continuing to launder money through gambling services.
• Individuals and organised criminals that are both domestic and international. 
• A significant number of cash transactions, as large sums of money can be moved in a short period of time through some gaming activities. 
• Online gaming services that are highly accessible and limit face to face interaction which means less opportunity to generate behavioural suspicion. 

AUSTRAC has recently taken strong action against gambling companies where the risk has been large and the responsibility has been negligent. We’ve had successful court proceedings against Crown’s casinos and Sky City. Legal action is currently underway against Star and Entain. 

Remediation is a big job and will continue to be a big job for these businesses, which are now operating under much more stringent regulatory supervision as well as a public spotlight. But we can all learn from what went wrong. 

I want to share some of the findings from our recent enforcement action.

In several cases, we've seen clear examples of boards and executives turning a blind eye to crime for the benefit of profit. A key failure that we have observed is when boards take a “tick and flick” approach to their AML responsibilities. In these situations we have seen cultural failures where the important questions are just not asked, or the questions that are asked are not sufficiently robust. Ignorance may appear an easy way out for boards, but its certainly no excuse. 

You just have to look at our civil proceedings against Crown Melbourne and Crown Perth - these concluded almost two years ago - to see examples of board failures. 

Crown continued a business relationship with a major casino junket operator until 2021, even though it was aware of allegations the operator was connected to organised crime. When ordering Crown to pay a $450 million dollar penalty, Justice Michael Lee said that it was clear that senior management within Crown knew of the high risk posed by junkets.

Over a period of a year and half there were 75 suspicious 'incidents' involving a total of around $23 million in cash, in a private gaming room which Crown Melbourne gave one casino junket operator exclusive access to.

There were also billions of dollars in transactions that Crown failed to appropriately monitor. We have since seen substantial and ongoing efforts undertaken by Crown to address these failings. 

Pleasingly, Crown along with every other casino in Australia, is now part of AUSTRACs public private partnership, the Fintel Alliance Casino Working group, which works across the sector to surface criminality.

Through some of our other regulatory actions, we've seen instances where international organisations operating in Australia are not paying attention to Australian laws. I was in Paris a few weeks ago for a Financial Action Taskforce meeting and online gambling was one of the sectors that was raised. I’ve seen examples of international companies failing to understand the risks that exist in specific jurisdictions, and therefore failing to understand and comply with the laws of that country.

We identified one gambling business that had a related overseas company contracted to exercise many of its AML functions for all of its customers, regardless of whether they were in Australia, the UK, somewhere in Europe… you get the idea. A one-size fits all approach is not effective. 

Another issue we've seen is companies outsourcing their money laundering responsibilities without follow up, which means these companies aren’t attuned to the risks that their products create, so they’re not mitigating those basic risks properly. 

We’ve seen many examples of pubs and clubs using templates for their AML programs, but without tailoring the templates to their specific business. When we asked some of those pubs and clubs about the details of their programs, they were actually surprised by some of the risks listed, or the controls that were meant to be put in place, under their own program. They had no idea about the finer details, they just ticked the box that they had a program in place. 

So the message here is that you can outsource the development of your program, or use a template, but it is your responsibility to ensure it is tailored to your business and reflects your systems and controls. You can outsource the work, but you can’t outsource your legal liability. When we look at these examples, there are lessons to be taken from them. 

We are happy to educate people about what we expect to see, but we do expect businesses and their boards to take responsibility for their money laundering programs. 

If you have the idea that AUSTRAC will continuously educate and educate and educate and then maybe take action years later - you are mistaken. 

If you think your business is too small to take responsibility for compliance – you are also mistaken. 

If you think AUSTRAC won’t take further action against you because it has done so before – you are again mistaken.

Your services and the gambling industry have been subject to this regime for many years now. It is your responsibility to comply with the law.

Each business needs a tailored approach to compliance based on individual systems and processes and the only way you will meet your compliance obligations is to have a thorough understanding of how criminal activity can infiltrate your specific business. 

It doesn’t matter if you’re running a small or large company – we’ve seen significant laundering risks in companies of all sizes. But when it comes to the bigger operators, the harms are greater, because the scale of the harm is magnified. 

I also want to caution those businesses we have worked with, or that have been subject to regulatory action, against reverting back to risky old ways of operating. We often see businesses letting old practices start to seep back and risk appetites starting to increase after a couple of years. We’d rather see businesses adapt their business model, like the casinos I’ve just mentioned, and remain compliant. 

One point that I’d like to highlight, is that many legitimate gambling businesses still need to come to terms with the fact they can’t run a business on ill gotten gains. In some cases this has meant losing a large chunk of revenue that is never coming back.

Take Crown, Sky City and Star casinos for example – state government controls mean the junkets aren’t returning and the controls put in place to allow them to operate are rigorous, more so than any other gambling business. To be successful and sustainable casinos have needed to reassess their business models.

The Crown Resorts group is probably the furthest ahead in this respect. Crown Sydney was designed as a VIP facility but without the junkets, and with the tighter requirements for enhanced customer due diligence they have had to change their business model in response, diversifying their entertainment offerings and focus.

We’re pleased to say that Crown has strengthened a number of its systems following AUSTRAC action. They include significantly increasing the resourcing of its AML function, investing in new systems to undertake transaction monitoring and implementing new procedures to better understand the source of their customers’ funds. 

We don’t want to just sit on these lessons, we want you to have the best understanding possible. In the past, we have put out information about the lessons learned and we will continue to do so, to close the loop. When we complete some of the bigger enforcement actions that are underway we will share what we learned with our reporting entities so businesses can understand what went wrong and what we expect from them going forward.

Well that brings us to the question ‘what does the future look like for AUSTRAC?’ I can tell you that the gambling sector is still a focus industry this year.

One of the biggest challenges is the gambling sector’s growth and diversification, especially in online gambling. While we have our eyes on the big players, our intelligence division is also watching some of those smaller offshore operators providing illegal scam based platforms. 

We’re seeing a rise in so called “scambling”, where unlicensed online gambling platforms advertise on social media and trick people to visit a scam website to participate in gambling. Players are then asked to deposit funds into a PayID but it’s highly unlikely they will ever see their winnings from these sites. This ruse is also being used as a means to launder money from other criminal activities.

This is a real example of harm being done to the community, especially to our most vulnerable people, including people in remote and regional Aboriginal communities. The AUSTRAC led Fintel Alliance is working with police, banks and other industry partners to raise awareness of this issue, and try to minimise the harm being done. 

The methods used by criminals to launder their dirty money are constantly changing, but AUSTRAC is evolving to meet these challenges.

The agency is going through its biggest change in nearly 20 years, as a result of the anti-money laundering reforms that passed the parliament late last year. AUSTRAC currently regulates around 17,000 businesses but that will rise to more than 100,000 as we bring tranche 2 entities, such as real estate agents, accountants and lawyers, under the legislation. 

These reforms mean we will have many more touchpoints in the community and we are going to be closing and disrupting many more gaps that organised crime is out to exploit.

Our staffing, systems and infrastructure is expanding in line with this bigger remit and so too are our intelligence and enforcement capabilities.

AUSTRAC might be taking a more front foot approach to known risks but we are equally keen to raise standards, work cooperatively with businesses, and educate in the first instance. We are preparing to engage much more with you and we want to see compliance cultures embedded across the industry to prevent exploitation of the gambling sector. 

We will work with you to ensure your businesses aren’t leaving the door open to criminal infiltration, which harms the Australian community and, at the end of the day, damages the legitimacy and sustainability of your business and your industry. 

So my message is this: don’t turn a blind eye to your legal obligations. Protect the community by protecting your business and we will work together to detect, deter and disrupt illegal activities. Thank you.