A whistle-blower and former employee of ClubsNSW has claimed that money laundering through poker machines is rife in pubs and clubs across the country.

In an exclusive interview with the ABC, Troy Stolz, a former ClubsNSW anti-money laundering and counter-terrorism finance (AML/CTF) compliance auditor, said that the scale of the problem was both “massive” and “alarming”.

“The crooks are going [into pubs and clubs] with their drug money and putting it in the machines and the crooks are cleaning it,” he said.

In a speech to Federal Parliament earlier Thursday, independent MP Andrew Wilkie said up to 95 per cent of clubs in New South Wales were “operating illegally” by not complying with anti-money laundering and counter-terrorism financing laws.

“No-one is doing anything about it,” he said.

Mr Wilkie said the “alarming information” came from a 2019 ClubsNSW board paper provided to him by a whistle-blower.

Mr Wilkie requested leave to table the ClubsNSW board document in Parliament, but leave was not granted.

“Deputy Speaker … they’re running a protection racket for the gambling industry,” he called out after the decision.

Mr Stolz, who worked for ClubsNSW for nine years and left his job in September last year, told the ABC he was the source of the leaked document.

ClubsNSW represents over 1,000 RSL, sporting and other clubs in the state, which has around half of Australia’s poker machines.

A ClubsNSW spokesperson described Thursday’s speech as “more anti-club hysteria from Andrew Wilkie”.

“If Andrew Wilkie has evidence of a licensed venue not meeting its AML/CTF obligations then he should raise the matter with AUSTRAC so the regulator can properly investigate,” the spokesperson said.

How criminals launder money using the pokies

The poker machine industry is one of the sectors of the economy most vulnerable to organised crime.

Neil Jeans, an independent consultant in anti-money laundering compliance, has previously estimated that around $65-75 billion worth of cash goes through the pokies across Australia each year.

Photo: Troy Stolz worked for ClubsNSW for nine years. (ABC News: Troy Stolz)

Mr Stolz explained how low and mid-tier drug operations were exploiting club pokies rooms, by depositing large sums of cash into poker machines, playing for a short period of time, then withdrawing the laundered money.

“With criminal organisations or individuals exploiting clubs and pubs … they’re willing to lose 20-30 per cent of what they want to clean at the end of the day to get that winning cheque or that piece of paper that validates where they’ve got that money from,” he said.

An estimated 770 clubs in NSW have more than 15 poker machines and are therefore considered “full reporting entities” under the Anti-Money Laundering and Counter-Terrorism Financing Act.

These clubs are required to make reports for transactions over $10,000 to the regulator AUSTRAC.

Mr Stolz said that most launderers worked just below the threshold for what might raise suspicions for large transactions.

“These criminals know that the limit is $10,000. So they will structure their transactions to go under the radar so they might go in and do say $5,500, take part cheque, part cash,” he said.

Mr Stolz said it can be labour intensive to launder money in this way but that clubs are ‘untouched’ by authorities compared to the banks.

“To clean the money from your drug sales, you send out someone — a uni student — working for you, in a day and give them 50 or 100 different venues to do. And you’ve got a team of 10. It’s quite easy to clean a lot of that money,” he said.

‘The whole industry is at risk’

Part of Mr Stolz’s former job involved advising and training staff from member clubs on what the law required them to do to prevent money-laundering, particularly around poker machines.

He said the understanding of these issues at the individual club level was “still very primitive”.

“The whole industry is at risk,” he said.

“The gaming machines are a perfect opportunity for launderers to get into venues — you’re relying on staff to be diligent, trained and the systems [to be] in place to pick up any abnormal behaviour.”

ClubsNSW should ‘enhance’ training, board paper says

The internal ClubsNSW document recommended that the association should “enhance” its training to member clubs in this area.

Clubs that pay around $30,000 per year for what’s called ClubSAFE premium membership get the top training package included with its membership.

Smaller clubs that could not afford premium membership get minimal training and must pay for additional training courses.

While ClubsNSW enjoys the benefits of not-for-profit status, the board paper quoted by Mr Wilkie refers to the importance of ClubsNSW making a profit out of its services — such as anti-money laundering training — that the organisation provides to member clubs.

“The most fundamental challenge is balancing the need to support members through the delivery of efficient and effective services while also generating a profit to contribute to the financial imperatives of ClubsNSW,” the document said.

A ClubsNSW spokesperson said they had identified the challenges for “low-risk” smaller clubs “given that many of these venues are community-run operations with a small number of paid staff”.

Moreover, ClubsNSW said its larger member clubs were taking a “proactive approach … and had appropriately minimised their risk of falling victim to money laundering practices”.

“ClubsNSW takes this issue very seriously, as do our members, with thousands of club employees completing AML/CTF training in the past 18 months alone.”

Regulator could do more

The Federal Government’s financial intelligence agency, AUSTRAC, is responsible for monitoring venues to make sure programs are in place which monitor transactions or identify customers.

Mr Stolz says that in 2016 he was told by AUSTRAC that 150 pubs and clubs had been ‘red flagged’ because they weren’t compliant, but in the last five years, no club had been issued a fine.

Source: https://www.abc.net.au/news/2020-02-13/wilkie-says-clubs-non-compliant-with-money-laundering-laws/11958254