Sydney gambling venues failed in duty

High rollers claiming to be housewives, retirees, childcare workers and tradies each laundered tens of millions of dollars worth of dirty cash through Sydney’s most profitable mega-club, with a series of red flags and warnings missed or ignored by management and board members.

The damning revelations contained in a cache of documents obtained by the Herald include an admission by Mounties – one of the largest club groups in Australia – that it allowed 13 customers alone to launder up to $226 million through its poker machines over just five years.

One customer was allowed to put $40 million through the machines – an average of $39,000 per visit – despite listing their occupation as “home duties”. Another player from Canterbury-Bankstown, who told Mounties she was a “childcare teacher”, managed to notch up $34 million in suspicious play, while a Liverpool “housewife” visited Mounties nearly every day straight for four years with $26.7 million in highly questionable funds.

When staff asked the duty manager why a verbal warning given to an identified high-risk customer in 2022 had not been documented, the manager replied that they did not “want to upset” the person because they were a “valued customer”.

Many suspicious players had their memberships and reward perks terminated only after the Australian Transaction Reports and Analysis Centre started demanding answers from the gaming and hospitality giant, which operates nine venues in western Sydney, the northern beaches and Central Coast.

Mounties acknowledged in a statement to the Herald that it had fallen short of community expectations.

“Mounties takes its regulatory obligations seriously and acknowledges that the community rightly expects better, and that we should have done better,” it said.

AUSTRAC is suing Mounties in the Federal Court for non-compliance with anti-money laundering and counter-terrorism financing laws, arguing the club did not do enough to prevent, identify and punish criminal networks that have flourished on the gaming floor.

An agreed statement of facts filed with the Federal Court last month lays bare the extent to which money laundering was allowed to run rampant in the Mount Pritchard District and Community Club, and its smaller Mekong Club in Cabramatta, including by:

• downplaying the risk of its poker machines being used to clean dirty cash
• permitting players who had been flagged by Liquor and Gaming NSW to remain customers
• failing to identify the source of funds used by players engaging in suspicious play
• falsely claiming in enhanced due diligence checks on suspicious players that their ongoing relationship with the club had been reviewed and approved

The $226 million in funds used by the 13 suspect customers at Mount Pritchard and Cabramatta between 2019 and 2024 is more than half the $507.5 million in total poker machine revenue recorded by both venues.

As “valued players”, they were rewarded with perks such as priority parking, box office tickets and access to the VIP lounge. One customer racked up $48,000 in Mounties rewards points to spend on food, drinks and more gambling.

In one case, a criminal dubbed “Customer 11” by AUSTRAC and Mounties was allowed to feed $40 million through poker machines at Mounties venues over just four years. Of the 1485 trading days examined by investigators, the customer played on 1013 days.

The player was categorised as “high risk” and was even captured on CCTV getting into the same lift as another customer who had been given large sums of cash by a third party. Despite exhibiting other classic money laundering behaviour, Customer 11 – who was Mounties’ top customer for turnover in 2020 and 2021 – barely attracted any attention from management.

In another case, a person who listed their occupation as “unemployed” was able to put $17.3 million through the machines. The person dubbed “Customer 3” was the subject of nearly 30 so-called “suspicious matters reports” and had been repeatedly seen giving bundles of notes to other customers and inserting cash into machines with no actual play.

When staff asked the duty manager in 2022 why a verbal warning given to Customer 3 had not been documented, the manager replied that they did not want to upset the person because they were an important Mounties customer.

Another player who put $1.92 million in the machines attracted a whopping 38 suspicious matters reports between mid-2019 and the start of 2024. The person, known as “Customer 1”, was seen on 10 occasions feeding wads of banknotes – often exceeding $10,000 – into poker machines and cashing out soon after with no game play. The person was seen giving large sums of cash to other patrons 11 times.

Despite all this activity and a longstanding “high risk” rating, Mounties did not terminate the player’s membership until October 2024, after AUSTRAC showed interest.

The agreed facts contain 13 such damning customer vignettes, totalling $226 million in activity. The true number of money launderers operating at Mounties venues is likely to be much higher.

Poker machines primarily operate in cash, which is the main instrument for criminals to obtain wealth through illicit activity, and more difficult to source and monitor than electronic funds.

Criminals can use them to conceal the source of illicit funds by inserting cash into them and then redeeming the funds in the form of a cheque with little or no betting activity, a practice commonly known as “bill stuffing”; by purchasing winning vouchers from other customers with cash and then redeeming the purchased vouchers; or by paying cash to a legitimate player and claiming their winnings as their own.

A 2022 NSW Crime Commission report revealed criminals were funnelling billions of dollars in cash through poker machines every year in NSW, and nominated mandatory cashless gaming cards as the most effective way to solve the problem. The Minns government has refused to endorse the cards and is yet to unveil its policy to combat money laundering and gambling harm.

The agreed statement of facts noted Mounties either detected high-risk behaviour and did not respond at all or appropriately, or failed to detect obvious high-risk activity entirely.

Mounties agreed in court documents that its venues were vulnerable to money laundering because they were located in the community and operated almost around the clock. During the four years probed by AUSTRAC, Mounties customers staked more than $4 billion on gaming play.

But throughout the relevant period, its nine gaming venues were overseen by one part-time anti-money laundering compliance officer, who also held other executive roles, and who raised concerns about under-resourcing from at least March 2022.

In May 2022, the officer’s report to the CEO and board noted that the gaming administration team was “unable to cover most of all gaming work requirements across the group including urgent requests from notices to produce [by Liquor and Gaming NSW]”.

When customers were identified as suspicious, it was rare for the club to terminate its relationship with them.

It was common practice for staff filling out enhanced due diligence forms on suspicious customers to indicate that the compliance officer had approved the person to continue their relationship with Mounties, when often the matter had not been escalated and the compliance officer had not considered it.

Among 604 customers who were added to the club group’s “Persons of Interest register” in the relevant period – including 255 who were identified as high risk – staff sought senior management or board approval to continue the club’s relationship with just 22 customers.

Only two were expelled.

But they were not unknown to staff. Internal emails show one staff member contacted the club’s anti-money laundering compliance officer in 2022 to ask whether there was “any update [on] getting rid of these members”, following an exchange about the state gaming authority’s interest in Customer 3.

The new documents are significant because they constitute an admission by Mounties to much of the misconduct first alleged by AUSTRAC when it announced the court action last year.

Until now, Mounties has defended itself by claiming it had relied “in good faith” on an anti-money laundering program provided by independent gambling consultant BetSafe. But the latest document shows Mounties accepts it is “ultimately responsible” for compliance with money laundering and terror financing laws and rules.

The admission that it allowed criminal activity to go unchecked paves the way for a huge fine and a major shake-up of how other Sydney club operators monitor and sanction suspected launderers – particularly those which use BetSafe.

Each breach carries a potential fine ranging from $21 million to $31.3 million.

The Federal Court document also notes Mounties has “maintained a co-operative and constructive relationship” with AUSTRAC and has admitted to breaches early.

Mounties said in its statement to the Herald that it had improved its systems, governance and culture. Specifically, it had established an in-house financial crime and compliance team and reduced reliance on third-party providers.

“Immediately on receiving a compliance assessment report from AUSTRAC, Mounties commenced a significant transformation program. We have co-operated fully and continue to work constructively with AUSTRAC.”

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