Politics

“Money laundering in NSW clubs, casinos and pubs huge” – whistleblower

A whistleblower and former employee of ClubsNSW has claimed that money laundering through poker machines is rife in pubs and clubs across the country.

By Steve Cannane, Kyle Taylor and Clare Blumer of the ABC investigations Team

Photo: It’s estimated that fewer than 10 per cent of clubs are compliant with anti-money laundering and financing of terrorism laws.

Key points:

  • A ClubsNSW board document obtained by the ABC shows up to 95 per cent of clubs have not been complying with anti-money laundering and counter-terrorism finance laws
  • Independent MP Andrew Wilkie said in Parliament that the clubs were “operating illegally”
  • ClubsNSW says it is helping smaller clubs to meet the requirements, while larger clubs are being “proactive”

In an exclusive interview with the ABC, Troy Stolz, a former ClubsNSW anti-money laundering and counter-terrorism finance (AML/CTF) compliance auditor, said that the scale of the problem was both “massive” and “alarming”.

“The crooks are going [into pubs and clubs] with their drug money and putting it in the machines and the crooks are cleaning it,” he said.

In a speech to Federal Parliament earlier Thursday, independent MP Andrew Wilkie said up to 95 per cent of clubs in New South Wales were “operating illegally” by not complying with anti-money laundering and counter-terrorism financing laws.

“No-one is doing anything about it,” he said.

Mr Wilkie said the “alarming information” came from a 2019 ClubsNSW board paper provided to him by a whistleblower.

Mr Wilkie requested leave to table the ClubsNSW board document in Parliament, but leave was not granted.

“Deputy Speaker … they’re running a protection racket for the gambling industry,” he called out after the decision.

Mr Stolz, who worked for ClubsNSW for nine years and left his job in September last year, told the ABC he was the source of the leaked document.

ClubsNSW represents over 1,000 RSL, sporting and other clubs in the state, which has around half of Australia’s poker machines.

A ClubsNSW spokesperson described Thursday’s speech as “more anti-club hysteria from Andrew Wilkie”.

“If Andrew Wilkie has evidence of a licensed venue not meeting its AML/CTF obligations then he should raise the matter with AUSTRAC so the regulator can properly investigate,” the spokesperson said.

How criminals launder money using the pokies

The poker machine industry is one of the sectors of the economy most vulnerable to organised crime.

A distorted picture of a woman playing the pokies.
A great way for organised crime to ‘wash’ illegal money?

Neil Jeans, an independent consultant in anti-money laundering compliance, has previously estimated that around $65-75 billion worth of cash goes through the pokies across Australia each year. Photo: Troy Stolz worked for ClubsNSW for nine years. (ABC News: Troy Stolz)

Mr Stolz explained how low and mid-tier drug operations were exploiting club pokies rooms, by depositing large sums of cash into poker machines, playing for a short period of time, then withdrawing the laundered money.

“With criminal organisations or individuals exploiting clubs and pubs … they’re willing to lose 20-30 per cent of what they want to clean at the end of the day to get that winning cheque or that piece of paper that validates where they’ve got that money from,” he said.

An estimated 770 clubs in NSW have more than 15 poker machines and are therefore considered “full reporting entities” under the Anti-Money Laundering and Counter-Terrorism Financing Act.

These clubs are required to make reports for transactions over $10,000 to the regulator AUSTRAC.

Mr Stolz said that most launderers worked just below the threshold for what might raise suspicions for large transactions.

“These criminals know that the limit is $10,000. So they will structure their transactions to go under the radar so they might go in and do say $5,500, take part cheque, part cash,” he said.

Mr Stolz said it can be labour intensive to launder money in this way but that clubs are ‘untouched’ by authorities compared to the banks.

“To clean the money from your drug sales, you send out someone — a uni student — working for you, in a day and give them 50 or 100 different venues to do. And you’ve got a team of 10. It’s quite easy to clean a lot of that money,” he said.

‘The whole industry is at risk’

Part of Mr Stolz’s former job involved advising and training staff from member clubs on what the law required them to do to prevent money-laundering, particularly around poker machines.

A front-on portrait of a man in front of the law courts.
Troy Stolz worked for Clubs NSW for 9 years

He said the understanding of these issues at the individual club level was “still very primitive”.

“The whole industry is at risk,” he said.

“The gaming machines are a perfect opportunity for launderers to get into venues — you’re relying on staff to be diligent, trained and the systems in place to pick up any abnormal behaviour.”

ClubsNSW should ‘enhance’ training, board paper says

The internal ClubsNSW document recommended that the association should “enhance” its training to member clubs in this area.

Clubs that pay around $30,000 per year for what’s called ClubSAFE premium membership get the top training package included with its membership.

Smaller clubs that could not afford premium membership get minimal training and must pay for additional training courses.

While ClubsNSW enjoys the benefits of not-for-profit status, the board paper quoted by Mr Wilkie refers to the importance of ClubsNSW making a profit out of its services — such as anti-money laundering training — that the organisation provides to member clubs.

“The most fundamental challenge is balancing the need to support members through the delivery of efficient and effective services while also generating a profit to contribute to the financial imperatives of ClubsNSW,” the document said.

First published at The ABC – Thursday 13 February 2020. See; https://www.abc.net.au/news/2020-02-13/wilkie-says-clubs-non-compliant-with-money-laundering-laws/11958254

One Comment

  1. And yet we have the local Greens candidate for the State seat loudly, proudly and vociferously promoting the Gordon Street ‘Taj Mahal’.

    A building who’s financing now seems more and more linked to ‘nudge, nudge, wink, wink, deals’ with Cex. Who, if the last Coast Focus magazine, and statements by it’s GM at Council meetings are both anything to go by, are embarked on even greater expansion. An expansion which must mean more gambling and gaming in Coffs Harbour and which appears to be reliant on the current ‘deal’ being rammed through our Council on one dubious and morally bankrupt casting vote after another in my, and many others, opinion.

    Indeed we have a former Greens member as Councillor continually voting for this too. Hello guys you are being “played as patsy’s”!

    In the opinion of many you are enabling a business model with large socio-economic community costs, all under the dubious guise of promised ‘more jobs’ while attaining an inferior Cultural Centre that will be surrounded by unneeded new Council Chambers.

    And according to a Clubs NSW whistle-blower there is a strong mathematical chance you are *highly likely* to be enabling the money laundering of drugs money and other ill gotten gains too.

    Another poster asked this question here last week. But I will ask again now too.

    Please feel free to explain to us how this so called abject failure of a “policy stance” of yours aligns with Greens policy on gambling and gaming? The principles of which I reproduce for you below. I ask as someone who once voted for Cr Townley too by the way.

    “Principles

    1. Gambling addiction and the harm it causes is a public health issue that negatively affects individuals, families and communities. Policy at all levels of government should aim to reduce gambling harm.

    2. Poker machines and other forms of electronic gaming machines should be restricted to casinos and removed from clubs and hotels.

    3. The ability of gambling interests to influence political parties, regulatory bodies and election outcomes should be minimised through strong laws and penalties. We recognise that to date successful NSW governments have failed to address the problems caused by gambling because they have been heavily influenced by the industry and because they have succumbed to the conflict of interest created by being both industry regulator and beneficiary of gambling tax revenue.

    4. Profits from gambling should be tightly controlled and taxed to reduce negative social impacts and to ensure that the public interest is put before profit making.

    5. Gambling advertising should be restricted to ensure the exposure of children to inappropriate gambling messages is minimised.

    6. Any new gambling technology or service introduced in NSW must have a neutral or beneficial impact as assessed against public health and gambling harm criteria.

    7. Communities, through council planning instruments, should have the ability to control the location and density of gambling venues and electronic gaming machines.”
    https://greens.org.au/nsw/policies/gambling

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