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It’s Thursday night. Your regular walks in, carrying large amounts of cash. He’s on a first-name basis with your bar staff. Plays the same high-value machine. Drinks the same top-shelf scotch. Generous tips. A “good guy”.
He plays big, often runs the credit out, and receives the VIP treatment.
It might seem harmless. Perhaps even good for business. But if that cash comes from crime (including tax evasion), your venue could be enabling money laundering.
If you’ve never asked where his cash comes from or how he made his money, your pub or club might be missing something important, and when the regulator knocks, you’ll be asked to explain why.
We’re all familiar with the traditional image of organised crime: offshore bank accounts, shell companies, or the cash-intensive car wash from Breaking Bad. However, in Australian pubs and clubs, it often looks far simpler: playing the pokies with illicit funds and receiving VIP treatment.
This was confirmed in the Project Islington Inquiry by the NSW Crime Commission (2022), which investigated money laundering through electronic gaming machines (EGMs). The Commission found that many criminals use EGMs not to clean their money in the traditional sense, but simply as a way to spend it.
EGMs are seen as a recreational outlet by organised criminals, leaving pubs and clubs increasingly exposed to misuse and regulatory risk.
You might be wondering: how is that money laundering?
Under Part 10.2 of Australia’s federal Criminal Code Act 1995 that sets out the Money Laundering provisions, it is an offence to ‘deal with money or other property’, including actions such as ‘receiving, possessing, concealing or disposing’ of that money or other property in circumstances where the person believes, or is reckless to the fact, that the money or other property is the proceeds of crime.
Accordingly, a customer who uses the proceeds of crime to fund their gaming would be considered to be ‘dealing’ with those funds.
Profile Mismatches: A Clear Trigger to Act
In recent guidance from AUSTRAC on indicators of suspicious activity for the pubs and clubs, AUSTRAC highlight a scenario where a customer has sources of wealth or sources of funds that are unexplained and/or inconsistent with their profile.
What does this mean in practice?
At a high level it means you should have an understanding of the customer’s occupation or business.
Consider a customer who says they’re a school teacher. They’re not married, have no children, and live in Sydney. Public sources show the average salary for teachers is around $100,000 per year. This equates to roughly $6,500 in monthly take-home pay.
Realistically, half or more of that is likely going toward rent, food, transport, and other basics. That doesn’t leave much room for large gambling losses.
If the customer is consistently losing over $3,000 a month, that’s a red flag and your enhanced customer due diligence (ECDD) processes should trigger.
Remember, you are not just watching for overtly suspicious conduct. You are looking for mismatches between the customer’s activity and what you know or understand about the customer.
AUSTRAC Examples
When you identify red flags and indicators of money laundering, which AUSTRAC and other regulators regularly publish, you are expected to initiate ECDD and consider submitting a Suspicious Matter Report based on the outcomes of that process.
Examples of red flags for pubs and clubs include:
- A customer is reluctant to provide ID and asks staff to refer to information or ID previously provided or “on file”
- A customer’s source of funds or wealth is linked to a business in a cash-heavy industry, and their EGM play or request for cheque/EFT payout could indicate they are cycling business takings through gaming machines to reduce tax liability
- A customer appears nervous, defensive, or evasive when questioned
- A customer seems coached or rehearsed in their responses
- A customer shares funds with another patron they have no clear relationship with
- A customer approaches another player and offers to buy their TITO (ticket in ticket out) ticket or the credit on their machine
ECDD for High-Roller EGM Players Often Means Asking Two Big Questions
It is easy to be impressed by VIPs. Big spenders, generous tippers, loyal patrons. But when the volume of funds becomes serious (especially the amount of cash), so are your compliance obligations.
If a high-spending EGM player starts dropping large sums and their lifestyle or work history does not explain where the funds come from, ECDD is not optional. It is legally required.
Whilst there are several measures to consider, often, it comes down to two deceptively simple questions:
- Where do your funds come from?
- How did you generate your wealth?
These are not just awkward questions that seem invasive. They are essential, especially in pubs and clubs where familiarity can create blind spots.
Yes, pubs and clubs are often hesitant to ask. You don’t want to offend a good customer. But AUSTRAC is clear. If the customer profile does not match their spend, you need to ask. Do it politely, professionally, and thoroughly.
It is not about confrontation. It is about clarity. A brief, well-documented conversation now can prevent major issues later. If the answers don’t add up, you have already spotted your first red flag, and it is time to request some supporting documentation.
That is where a solid ECDD process pays off. It allows you to act confidently, not guess, when the numbers raise questions your risk framework cannot ignore.
✔️ How to Reduce the Friction
Make these conversations smoother for both your staff and your patrons:
Use technology to lead the conversation
A standalone iPad or kiosk can help explain what information is needed, why it is required, and how it relates to your venue’s legal obligations. This reduces pressure on frontline staff and sets a consistent, professional tone. It also helps prevent unnecessary embarrassment for patrons, many of whom can easily demonstrate that their gaming is funded legitimately.
Keep it private and professional
Allow patrons to upload documents or fill out forms digitally. This prevents awkward face-to-face requests and protects customer privacy.
Emphasise it is part of your broader responsibility
Expand the request beyond AML/CTF compliance to include your gambling harm minimisation obligations. This information should inform a range of risk and compliance activities, and it avoids multiple compliance interactions for the customer who is ultimately seeking entertainment.
What You Can Do This Quarter
Here are five practical steps your pub or club can take in the next 90 days:
1. Identify Your High-Spend Patrons
Review customer account and loyalty data, cash transactions, and patron profiles. Who stands out? Who doesn’t add up? Who should you be talking to?
2. Review recent typologies and discuss them with your gaming team
Use AUSTRAC’s recent red flag and indicators as your guide and discuss them with your team that work within the gaming room. Do they sound familiar?
The latest indicators can be found on AUSTRAC’s website: https://www.austrac.gov.au/business/how-comply-guidance-and-resources/guidance-resources/indicators-suspicious-activity-pubs-and-clubs-sector
3. Refresh Your ECDD Protocols
Make sure your internal process define:
• When ECDD should be triggered
• What information to collect
• How to assess both source of funds and source of wealth
• How will you seek to validate what the customer tells you? e.g. if they claim to have recently sold an investment property, what searches can you perform to validate this information.
• What are your triggers to request supporting information and what information do you require?
• When to escalate or submit a suspicious matter report (SMR)
4. Train Your Floor and Bar Staff
Many red flags start with an offhand comment. Equip your frontline team to recognise signs and report them quickly. These seemingly innocent comments can be the catalyst for identifying a criminal syndicate operating within your venue.
5. Document Everything
If it is not recorded, i.e. the trigger, the decision, the rationale, then in AUSTRAC’s view, it did not happen and you did not identify, mitigate or manage the risk appropriately.
It is one thing to do the right thing. It is another to be able to demonstrate it.
Know the Person, Understand the Risk
Knowing a patron’s favourite drink or gaming machine is part of good hospitality.
Understanding where their funds come from, and whether that source aligns with their lifestyle and declared occupation is part of good risk management.
When you ask the right questions, you gain clarity, not just compliance. You’re better equipped to assess whether funds are legitimate or potentially the proceeds of crime. That protects your venue, your staff, and your community.
Regulatory pressure on pubs and clubs is increasing. But with a few smart, practical steps, your venue can identify and manage the risks posed by VIP customers and be well placed to respond to regulatory scrutiny.
Need help getting started?
Platinum AML understands the money laundering and terrorism financing risks, as well as the operational realities of managing gaming operations in a compliant and responsible manner under the Australian AML/CTF regime. Being regulator-ready is just the beginning. Our goal is to help your venue manage financial crime risks effectively, minimise the impact on legitimate customers, protect the community from harm, and build a sustainable gaming business that continues to support vital community initiatives.
Click here to book in a free 15-minute initial chat to see how we can help set you up for success.