The New South Wales Crime Commission (NSWCC) has released the Islington Report, the result of a multi-agency investigation into if and how funds from criminal proceeds are being channeled through EGMs in pubs and clubs throughout the state.

The report suggests that there are no controls or data collection methods used to keep an eye on who is funnelling tens of billions of dollars through the state’s venues each year. As such the NSWCC has made several recommendations in the Islington Report – including a mandatory cashless gaming system – to crack down on criminal funds being laundered or used through pubs and clubs.

The inquiry examined two forms of money laundering – that which seeks to use EGMs to load, ‘clean’ and then withdraw cash to hide its origin; and that which involves criminals using the ‘dirty’ cash to gamble.

The Islington Report found that the ‘cleaning’ of the proceeds of crime is not widespread in pubs and clubs, as processing vast sums of cash is inefficient compared to other avenues for laundering. AHA NSW have noted their vindication in this long-held assertion.

“The Crime Commission agreed with what we have said for some time – that the cleaning of the proceeds of crime is not widespread in NSW pubs,” AHA NSW CEO John Whelan said.

Whelan was far more critical of the call to install a mandatory cashless gaming system for all EGMs across the state.

“To then, at the same time, have the Crime Commission call for all cash to suddenly be banned in venues is an unjustified overreach.

“We have an industry on its knees post-COVID now being told to introduce an unproven, untested, un-costed and unnecessary cashless system which treats every patron like a criminal.

Whelan compared the recommendation to install a mandatory cashless system to the now-repealed lockout law policies – knee-jerk and misguided.

“This is the type of misguided, sledgehammer approach which has resulted in past ‘policy on the run’ failures like the ill-fated greyhound ban and the now infamous lockout laws which crippled Sydney’s night-life for years.

“The Crime Commission has found using EGMs to clean dirty money is not widespread, so there is no reason why the use of cash should be banned – it makes no logical sense.

Whelan continued: “There is no justification for government to monitor the recreational spending of the law-abiding people of NSW. If criminals are the problem, let’s target them.

“Only two weeks ago the NSW Government started a cashless gaming trial. Surely this and other planned trials need to be completed and assessed?”

While direct money laundering was not found to be happening in pubs and clubs, the report suggests that large sums of the proceeds of crime are being gambled by criminals in venues across the state.

“At the moment serious offenders can enter NSW pubs and clubs, sit down next to patrons in gaming rooms, and openly feed large sums of cash from their crimes into poker machines with no real fear of detection,” stated New South Wales Crime Commissioner Michael Barnes.

“The lack of traceable data collected by EGMs means the exact scale of this criminal activity is impossible to determine but it is clear from our investigations it involves many billions of dollars every year.

“These basic reforms will help exclude vast sums of dirty cash that are primarily the proceeds of drug dealing. I’m sure venues won’t argue they should keep receiving that.”

Whelan said the AHA would be supportive of a call by the Commission to reduce EGM cash load-up limits in an effort to stop criminals using machines.

“Hotels do not want criminals in venues – and we will work closely with Government, police and the community on common-sense measures which will actually work such as facial recognition to identify and ban criminals,” he said.

“Combined with a lower cash input limit, this will be the most effective way to prevent illegal money being spent in venues.”

“The AHA NSW is committed to working with government and police but there are better ways to target the small percentage of the population who are criminals – without destroying jobs, community facilities and have government monitoring the spending of the law-abiding public.”

Islington Report recommendations

The Islington Report makes the following recommendations to curb money laundering within pubs and clubs:

  1. Government introduce a mandatory cashless gaming system to minimise EGM related money laundering within pubs and clubs.
  2. Government, in consultation with industry and regulators, create a legislative or regulatory framework requiring certain standardised data be maintained for EGMs to better flag suspected money laundering.
  3. Government engage with industry to:

(a) identify ways that collection and analysis of EGM data could be enhanced for the purposes of money laundering identification at a venue level and to improve evidence available for prosecution;

(b) explore technical and policy/process solutions to better utilise data collected by EGMs;

(c) identify ways of creating real-time alerts for money laundering flagsThe legislative and regulatory frameworks governing EGMs in NSW be amended to clarify that persons/entities with functions associated with EGMs must take steps to prevent money laundering.

4. The legislative and regulatory frameworks governing EGMs in NSW be amended to clarify that persons/entities with functions associated with EGMs must take steps to prevent money laundering.

5. Government introduce a mechanism that enables government agencies or venues to recommend the cancellation/revocation of an RCG certification; and a mechanism for the regulator to revoke an RCG certification in appropriate circumstances.

6. Government engage with industry and regulators to create a legislative or regulatory mechanism to support the exclusion of persons suspected of dealing with proceeds of crime from venues with EGMs, supplementing the existing rights of venues to exclude patrons from their premises.

7. Government, in consultation with industry, update education requirements to include education on money laundering and increase the frequency of the training provided to venues from internal and external sources to support venues in discharging their obligations under the AML/CTF Act.

8. Government work with industry to build the sector’s investment in AML/CTF training and education, and secure support for training from external sources.

The full Islington Report can be found here.

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