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Australia's New South Wales (NSW) state crime commission and the state’s gaming watchdog have announced a joint inquiry into slot machine money laundering, just weeks after a government investigator flagged large-scale washing of funds in pubs and clubs.
NSW Crime Commission head Michael Barnes on Friday called for industry and public submissions by January 28 to the Inquiry into Money Laundering in Pubs and Clubs, to be held in conjunction with the Independent Liquor and Gaming Authority (ILGA).
“Working with the [ILGA] and the Australian Criminal Intelligence Commission, we’ve established that last year A$85bn [$61bn] was gambled in poker [slot] machines in pubs and clubs in NSW,” Barnes said in a statement.
“We simply don’t know how much of that was the proceeds of crime being laundered by or on behalf of criminal syndicates, but when so much money is involved it is reasonable to suspect some level of criminal activity.”
The Crime Commission’s decision to probe the highly lucrative land-based segment was independent of government, but NSW Premier Dominic Perrottet and outgoing gaming minister Victor Dominello welcomed the move.
“For the first time we will get an understanding of the link between organised crime and how they use pokies to launder dirty cash,” Dominello said in a separate statement.
The terms of reference provide for public hearings and private testimony on the nature and scope of money laundering in the state’s licensed premises, particularly involving electronic gaming machines.
They also imply legislative reform after identifying “potential vulnerabilities within the regulations and legislation governing gaming machines which could be exploited for the purpose of money laundering”.
The inquiry is another example of high-level scrutiny of Australia’s gambling industry apparently driven by media coverage.
The 60 Minutes television programme and affiliated newspapers in late November quoted a senior official with regulator Liquor & Gaming NSW as saying “hundreds of millions of dollars” were laundered in the greater Sydney region alone in the weeks since the end of a pandemic lockdown.
David Byrne, director of investigations and intervention, supported a probe into pubs and clubs with powers similar to the NSW Bergin Inquiry into Crown Resorts or the enhanced review now being held for The Star Entertainment Group’s Sydney casino.
It was not immediately clear if Byrne’s comments and other material in the media reports were decisive in triggering the inquiry. A spokesperson for the NSW premier’s office declined to expand on the government’s press releases when contacted by VIXIO GamblingCompliance on Wednesday.
However, VIXIO GamblingCompliance understands that the ILGA had been investigating allegations of money laundering in the slot machine segment prior to the 60 Minutes report and associated media reports in late November.
ILGA chairman Philip Crawford, in a letter to the government in the days following the 60 Minutes report, also recommended a full-strength inquiry into slot machine money laundering and other crimes.
In any case, the new inquiry marks another step in a difficult period of regulatory correction for the Australian gambling industry.
This years-long regulatory tightening has seen Crown Resorts casino operations postponed in Sydney and placed under state government control in Melbourne, the banning of junkets and greater responsible gaming controls placed on corporate bookmakers.
The latest inquiry is also notable for breaching the defences of industry lobby group ClubsNSW, which had previously been successful in watering down or blocking current government reform proposals for slot machine use.
ClubsNSW responded to the 60 Minutes and other media reports with suggested anti-money laundering reforms of its own.
Still, the Crikey online news service, along with other media reports, has attributed this week’s removal of reform-minded minister Dominello from the liquor and gaming portfolio to ClubsNSW’s “brutal and very successful campaign against him”.
Barnes, the NSW Crime Commission head, noted the significance of ClubsNSW’s role but added that the segment needs a strong dose of sunlight.
“We aren’t starting with any preconceptions about the extent of that criminal activity. We know pubs and clubs deliver valuable community services and we are assured ClubsNSW, the peak body for the industry, is committed to stamping out illegality,” he said.
“However, we expect the expert investigators, data analysts, lawyers and intelligence officers working on this project will uncover activities not previously known to operators or regulators that will assist to ensure pubs and clubs stay profitable while the community is protected.
