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Poker machines used to launder cash and avoid tax

Proceeds from pokies gambling, at any stage, can be turned into an electronic funds transfer or a cheque for a bank account, which doesn’t need to be reported to the tax department.

“There’s no point for a pub or club deciding to look at pokie money laundering if law enforcement, which is the ultimate body that has to deal with it, has no interest in [prosecuting it],” Mr McTaggart said.

Troy Stolz, a former ClubsNSW anti-money laundering compliance auditor, said regulators “don’t want to listen” and clubs worry that intervening with a potential money launderer could drive their customer to a pub.

“The problem is everyone is silent on this; it is fuelling the ice epidemic, with low to mid-level dealers getting away with it in pubs and clubs,” Mr Stolz, who is currently suing ClubsNSW, alleging bullying and other breaches of the Fair Work Act, said.

Australian Transaction Reports and Analysis Centre (AUSTRAC) last prosecuted a poker machine operator for suspected breaches of AML in 2010 making George Thomas Hotels appoint an external auditor for “failing to undertake customer identification”.

Liquor and Gaming NSW confirmed there are no current investigations into any pubs or clubs.

While poker machine numbers have fallen in NSW, revenue is rising, especially in pubs, which netted more than $1.4 billion in profit over six months to December 2019. The state government also made nearly $500 million in tax from the 22,690 machines in NSW pubs in that six-month period.

Poker machines can be loaded with $7500 in NSW - $6500 more than anywhere else in Australia.

Poker machines can be loaded with $7500 in NSW – $6500 more than anywhere else in Australia.Credit:Bloomberg

Money laundering is a “substantial contributor” to pokies in NSW because of the high load-up limit, Monash University Associate Professor Charles Livingstone said.

“You can put up to $7500 into a poker machine in NSW any time you like,” Dr Livingstone said.

“In Victoria, which has the second-highest load limit, it’s $1000, in Queensland it’s $100, and in SA and Tasmania they’re still using coins,” Dr Livingstone said.

A recent ANU study of poker machine data concluded at least 10 per cent of turnover in NSW clubs and pubs is likely to be “laundered from proceeds of crime or work off the books for tax-dodging purposes”, Dr Livingstone said.

AUSTRAC referrals to the police for AML breaches compete with other priorities, Mr McTaggart said.

“Say we’ve got an allegation that $100,000 went through a machine over two years and the detective also has a lady who is missing her daughter — which job should they do?” Mr McTaggart said.

AUSTRAC’s fear is that if they “dig too deep with the clubs they’ll probably shut most of them down with the fines”, Mr Stolz said.

ClubsNSW said it has “substantially increased” the support it provided clubs to help them comply with AML laws.

“Each club with 16 or more gaming machines is required to have a comprehensive AML program, which is independently reviewed biennially,” a spokesman said.

“Under these programs, clubs monitor and regularly report any suspicious activity to AUSTRAC.”

A Liquor & Gaming NSW spokesman said a “small number” of suspicious play reports have been made to AUSTRAC over the “last couple of years”.

Cash seized during raids on Assure Protection Services, a Sydney security business that allegedly acted as a front to launder $100 million from organised crime groups.

Cash seized during raids on Assure Protection Services, a Sydney security business that allegedly acted as a front to launder $100 million from organised crime groups.Credit:NSW Police

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NSW Police said they “follow the money as part of investigations into illicit activities such as drug importation and supply”.

AUSTRAC said they “consistently” receive suspicious matter reports but cannot comment on investigations.

These reports are “available to more than 5000 designated users” including law enforcement, AUSTRAC said.

NSW AHA did not respond to comment requests.

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