Nick Xenophon (SA, Independent) Share this | Hansard source

This relates to legislation I introduced back in 2012, which is still on the Notice Paper and which needs to be debated and dealt with. The aim of the Anti-Money Laundering Amendment (Gaming Machine Venues) Bill 2012 is to detect and reduce money laundering in Australia's more than 5,400 poker-machine venues. Back in 2012, when I first introduced this bill to amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, reports were emerging of a Melbourne hotel that had failed to act on suspicions of money laundering through its poker machines. Records showed an individual and his family were claiming winnings of up to $40,000 per week. Anyone who knows anything about poker machines will tell you these odds are nigh-on impossible.

The report—by Adam Shand and Chip Le Grand of the Australianwas just the tip of the iceberg of the use by criminals of poker machines for money laundering. Unfortunately, the parliament did not support the bill on that occasion; and, unfortunately and predictably, the problem has not gone away. If anything it has gotten worse. The government's money laundering intelligence agency, the Australian Transaction Reports and Analysis Centre AUSTRAC, recently detected a 'significant increase' in the number of suspicious activity reports in relation to the use of gaming machines, according to a report this month in News Ltd publications by Frank Chung. AUSTRAC chief executive John Schmidt said:

AUSTRAC has undertaken focused regulatory activities in the pubs and clubs sector around suspicious-matter reporting over the past few years.

By consulting with our partner agencies in law enforcement, AUSTRAC has been able to identify patterns of behaviour that potentially constitute money laundering in hotels and clubs operating electronic gaming machines.

Regulatory engagement with the licenced venues, including sharing examples of risky patron behaviour, has helped to improve awareness and identification of potential money laundering activity.

AUSTRAC went on to say:

This work, coupled with the provision of specific guidance to industry, has created greater awareness of the money laundering risks in the industry and has resulted in a significant increase in suspicious-matter reporting being received by AUSTRAC.

I applaud the work of AUSTRAC and its partners in law enforcement, including the AFP, as well as cooperating licensed venues.

A spokesperson for the Australian Federal Police told News Ltd that the AFP was targeting money laundering, including in gaming machine venues. That person said:

The methods by which money may be laundered are varied and can range in sophistication. Organised criminal syndicates use a variety of methods and avenues, including matters involving the gaming sector.

The next comment by the AFP is crucial to understanding why it is essential that parliament look again at this bill that I have introduced again. The AFP spokesperson said:

Both state and federal police can lay charges under money laundering legislation. It is also important to note that the regulation of poker machines is a matter for states and territories.

The AFP enforces money-laundering offences but it can only charge an organised crime figure or group with money-laundering offences if the crime has been detected in the first place. This bill, if passed, will dramatically improve the ability of AUSTRAC and the AFP to detect money laundering through poker machines. Improved detection will lead to more arrests and charges and, in the long run, less money laundering in Australia's suburban poker machine lounges and through our casinos.

The AFP spokesperson also put their finger on the single biggest obstacle to the reform of the gaming machine sector in the country; that is, state governments. State governments are hopelessly compromised via the more than $4 billion in taxes that they raise each year from poker machine operators. But I do not suggest for one minute that they want to see any of those taxes coming from money-laundering activities nor do I suggest that the poker machine sector or the industry itself would want to see any money coming from money-laundering activities, which is why I am gobsmacked that they do not support this very sensible and measured piece of legislation.

According to the current laws, gambling venue owners are supposed to report suspicious transactions, but there is no legal obligation. State governments cannot be trusted to curb the excesses of this industry and have failed to curb the extent of money laundering in their own backyards, although it is preferable for it to be undertaken through federal law.

Industry sources, reported in TheSydney Morning Herald several years ago, have estimated that approximately $2 billion a year is laundered through hotel, club and casino poker machines and gambling chips each year nationally. The ability to load up poker machines with large amounts of cash, as well as the often lax regulations surrounding payouts, mean that launderers can and do get away with it. Criminals are attracted to poker machine venues because they are so commonplace. There are about 5,400 venues in Australia and many are darkly lit, anonymous places with very little face-to-face contact with staff or other customers.

The bill is even more necessary now than when I first introduced it in 2012. In that time, the number of poker machines has continued to expand, expanding the opportunities for criminals to use them for money laundering. One of the most recent assessment of poker machine numbers in Australia, based on state and territory figures from last July, indicates that Australia has about 200,000 poker machines across 5,400 venues. Combined, they reaped almost $13 billion in losses from Australians each year—forty per cent of that, parenthetically, is from problem gamblers, according to the Productivity Commission. I will not now go into the significant damage that that causes individuals, because the focus of this bill is in relation to money laundering.

This bill proposes to ensure that the extent of money laundering is restricted and that it is made much more difficult. Money laundering through poker machines can be achieved by one of two ways. Separately or in combination, criminals can load up thousands of dollars into a machine, up to but not above the trigger for payouts to be made by cheque. It is $10,000 in NSW, as I understand it. They then play a few games, usually losing a few dollars, and then cash out their credits with the venue—laundering the money in the process. Depending on the regulations in each state, careful so-called playing can ensure that the criminal walks out with thousands of dollars in clean—that is, laundered—money.

A second option for criminals, usually used in combination with the first, is to wait around venues until a gambler wins a prize. Depending on the regulations, winnings over a certain amount are issued by cheque to make sure that gamblers have a cooling-off period while the cheque is processed so that they do not gamble away their winnings. Instead, criminals approach gamblers and offer to buy the cheques off them for cash, often at a discount, which the gambler can then use to continue playing. The launderers then cash the cheques, which have been signed over by the original claimant and do not carry the name of the criminal.

This bill aims to address these practices through requiring that payouts over $1,000 are made by cheque and are threshold transactions under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Such transactions require a report made to AUSTRAC in the approved form under the act, allowing AUSTRAC to monitor and record such activity for the purposes of reducing money laundering and other prohibited actions. This reporting usually includes relevant personal details of the so-called winner and details of the transaction itself.

The bill also requires that any cheques or credits for winnings that are transferred into another name are also threshold transactions under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and also requires the details of the new recipient of the cheque or credit to be reported to AUSTRAC. Failure by venues to comply with the act can result in a significant penalty.

It is important to note that because of the miserly nature of poker machine payouts, these changes will not be an undue burden on venues. There are not going to be that many transactions in a typical day that will be affected by this, but it will make a difference with the criminals who are laundering up to $2 billion a year of drug money that is made through organised crime and various illegal activities through poker machine venues. Poker machines rarely pay out in large amounts and instead are generally programmed to provide smaller, interspersed wins. Creating these two new definitions of threshold transactions will allow AUSTRAC access to information relating to larger wins and will lead to a fine-grain view of patterns and habits vital to uncovering criminal activity.

I am not suggesting that this will put an end to that criminal activity, but it is going to make it a lot harder and a lot more cumbersome for the criminals. It will make their lives just that little bit more miserable. It will mean that they will have to work a lot harder to try to launder money. It will mean that there is a higher risk of detection because of what they will have to do to get around what is being proposed. Under these proposals, each cheque drawn triggers a report to AUSTRAC and the AFP. Armed with the information on suspected money launderers, AUSTRAC and the AFP can then apply anti-money-laundering offences.

The bill, if passed, will also act as a deterrent to criminals who will no longer be able to use the machines to launder large amounts of cash. The bill also amends the act so that the controller of a poker machine venue will be considered to be providing a designated service under the act. This will mean that the controllers of poker machine venues will be required to abide by the laws surrounding threshold transactions. AUSTRAC already has regulations in place relating to some forms of gambling, including sports betting and casinos. These additional safeguards are a way to plug a loophole in the law, as well as protecting problem gamblers and venue owners.

Poker machines cause great harm in our communities. The poker machine sector is clearly wary of regulations. They fought and succeeded in stymying moves in the last parliament to limit the damage done to problem gamblers via $1 bets and mandatory precommitment, as recommended by the Productivity Commission. Such measures, if adopted, would have made a real difference to many people's lives. Now, unfortunately, it appears that the poker machine lobby, the poker machine barons, will resist these simple measures to curb money laundering via poker machines. Clubs Australia Executive Director, Anthony Ball—Anthony, if you are listening, cheerio to you—has called this bill a 'waste of the time and resources of our federal parliament'. Mr Ball went on to say:

This bill has been rejected by the Parliamentary Joint Select Committee for Gambling Reform, and its introduction would only heap further regulatory burdens on clubs, which already have significant anti-money laundering compliance measures in place despite their low risk profile.

Mr Ball reckons that anyone attempting to launder money through poker machines would have to be the world's dumbest criminal due to the presence of CCTV cameras and existing identification requirements, saying, 'The only criminal who would try to do this is one who was desperate to get caught.' What nonsense. Mr Ball clearly, incredibly, has no understanding of what is going on in the venues he is meant to represent. He should pick up the phone and call AUSTRAC or the AFP.

By contrast, Adam Masters—one who does not have a vested interest in this issue—who is a researcher with the Transnational Research Institute on Corruption at the Australian National University, has said that lowering the threshold for reporting to AUSTRAC to $1,000 would 'definitely have an effect' on the profitability of money-laundering operations. Mr Masters, a former 25-year veteran with the AFP and a former team leader for Interpol in Australia, predicted the bill would impose 'minimal administrative burdens on venues'. The poker machine sector already fleeces close to $13 billion from Australians each year. It must not be permitted to impede what I believe is sensible reform, what Mr Masters from the Australian National University says would impose a minimal administrative burden on venues but would make a difference in terms of money-laundering operations, make it harder for the criminals to launder their money.

The bill is an essential step towards bringing the scourge of money laundering in poker machine venues into sharp focus and allowing police and AUSTRAC to enforce the law. I urge my Senate colleagues to support it when it next comes before the Senate for a vote.