Bergin Inquiry Report – Further Information
21-029 | 22 February 2021
Relevant for: CEOs, Directors and Gaming Managers
Member clubs are advised that, further to circular 21-026 the Bergin Inquiry Report has resulted in additional commentary on anti-money laundering and counter-terrorism financing (AML/CTF) risks and controls in all NSW gaming venues, including clubs.
Clubs are advised that the Bergin Inquiry Report focused exclusively on the suitability of Crown to hold a casino licence and the regulatory regime for casino operators in NSW. Contrary to some media reports, the Inquiry Report did not make any assessment of the AML/CTF risks in clubs and hotels, nor did it make any comments, findings or recommendations with respect to additional AML/CTF controls for clubs and hotels.
A single paragraph of the 751-page Report commented that a cashless gambling card may have the potential to be effective at combatting money laundering in casinos.
The Report contained no analysis of evidence in relation to the efficacy or cost-effectiveness of such a card. For example, it contained no mention of the fact that a similar mandatory gambling card was trialled and later abandoned in Nova Scotia, Canada owing to it causing most recreational gamblers to stop playing due to privacy concerns.
The Bergin Report has been cited to support the introduction of a cashless gambling card in clubs and hotels under the misapprehension that the money laundering risk for casinos and clubs is equivalent — it is not.
The money laundering risk profiles of clubs and casinos are very different. The opportunities for money laundering in casinos are far greater than clubs due to the nature of products on offer and the risk profile of customers.
AUSTRAC identifies the following money laundering methodologies in the gaming sector:
- Exchanging illicit cash for casino chips or gaming tokens
- Exploiting third parties — ‘mules’ and ‘cleanskins’
- Casino VIP rooms and high-stakes gambling
- Casino-based tourism and junkets
- Electronic gaming machines
- Online gambling.
All six of these indicators are available in casinos, whereas only two are possible in clubs.
Clubs already have measures in place that make them less attractive to money launders. Unlike a casino, every person entering a club must sign in and provide a valid form of identification. Also, the maximum bet on a club gaming machine is $10 whereas the maximum bet in a casino VIP room exceeds $250,000, making it significantly more difficult to launder large amounts of money in a club unnoticed.
Casino junket operators and VIP players typically deposit tens of millions of dollars in “front money” each visit. Most clubs make less than $1 million in gaming revenue in an entire year. A person turning over millions of dollars in a club would be immediately recognised as suspicious and a suspicious matters report would be filed with AUSTRAC, as required by federal legislation.
In 2015, a report by AUSTRAC identified that there were 5,837 high-risk reporting entities in Australia — of those, only 38 were clubs or hotels. Given there are approximately 5,700 clubs and hotels that operate gaming machines in Australia, this figure indicates that the overwhelming majority of clubs and hotels are not high-risk for money laundering.
Clubs take their AML/CTF responsibilities seriously; ClubsNSW has worked closely with AUSTRAC for many years to assist clubs with compliance. In our view, subjecting clubs to the cost and red tape of a mandatory gambling card would be heavy-handed and disproportionate to the risk.
ClubsNSW will continue to work closely with AUSTRAC and the NSW Government to ensure a risk-based approach to protecting clubs from being exploited by criminals for money laundering purposes.
It should also be noted that, contrary to recent media reports, ClubsNSW is not suing Liquor and Gaming NSW. Last year, the following statement was made in Parliament by Finance Minister Damien Tudehope:
“In February this year Federal MP Mr Andrew Wilkie tabled in the Federal Parliament allegations about money laundering in registered clubs and hotels. The allegations arose from concerns raised by a former ClubsNSW employee. I am advised that Liquor and Gaming NSW, as the regulator responsible for registered clubs, has conducted a review of the claims and has engaged with the whistleblower mentioned in the media articles. No breaches of the Registered Clubs Act 1976 or any other legislation administered by Liquor and Gaming NSW were identified. Liquor and Gaming NSW was also engaged with AUSTRAC, the Federal regulator primarily concerned with money laundering, about AUSTRAC's consideration of the claims and whether they raised specific concerns over activities in clubs in New South Wales.”
The matters referred to above are the subject of ongoing legal action. Accordingly, ClubsNSW has subpoenaed information from Liquor and Gaming NSW.