Australian casinos continue to face mounting scrutiny as AUSTRAC intensifies its efforts to combat money laundering and terrorism financing in the gambling sector. Recent directives requiring The Ville Resort-Casino in Townsville and Mindil Beach Casino Resort in Darwin to appoint external auditors signal a serious escalation in Australia’s regulatory response to AML/CTF risks in the casino industry. This development underscores the broadening reach of AUSTRAC’s enforcement, sending a message that compliance is not optional, regardless of an entity’s size or location.

AUSTRAC Enforcement and Casino AML/CTF Compliance

AUSTRAC, Australia’s financial intelligence and regulatory authority, has become increasingly assertive in its campaign to eliminate illicit money flows through gambling venues. The agency’s power is derived from the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and its accompanying Rules, which mandate a suite of obligations for businesses at risk of facilitating financial crime.

Both The Ville Resort-Casino and Mindil Beach Casino Resort have been directed to undergo independent audits, a measure AUSTRAC employs when it identifies substantial risks or control weaknesses. This action follows significant regulatory interventions against larger entities, such as Crown Resorts, The Star Entertainment Group, and SkyCity, which have led to record-breaking penalties and comprehensive remediation programs.

The audits, to be performed at the expense of the casinos, will rigorously examine the adequacy of each venue’s AML/CTF program, risk assessments, senior management oversight, and transaction monitoring procedures. AUSTRAC CEO Brendan Thomas publicly emphasized that all gambling venues—including smaller, regional operators—must be alert to their obligations. “Although they may be smaller than entities such as Crown Resorts and The Star, like all gambling venues, The Ville and Mindil Beach face heightened risk of exploitation by criminals,” Mr Thomas said, according to an AUSTRAC press release.

Casino AML/CTF Compliance and Regulatory Expectations

The risks associated with casino operations in Australia are well documented. Both gaming machines and table games present unique vulnerabilities, especially where customer anonymity, high-value transactions, and cross-border clientele are involved. The Financial Action Task Force (FATF), in its mutual evaluation of Australia, has repeatedly highlighted the gambling sector as an area requiring enhanced supervision and risk mitigation.

The AML/CTF Act imposes a range of obligations on casinos, including but not limited to:

• Conducting business-wide and customer-specific risk assessments.
• Maintaining and regularly updating a compliant AML/CTF program, including systems for ongoing customer due diligence and transaction monitoring.
• Reporting suspicious matters, large cash transactions, and international funds transfers to AUSTRAC in a timely manner.
• Ensuring robust governance frameworks, with board and senior management oversight of AML/CTF activities.

AUSTRAC’s decision to mandate external audits for The Ville and Mindil Beach is a clear response to deficiencies observed in these core areas. The regulator has not disclosed the specific nature of the potential gaps identified, but common failings in the sector include inadequate risk assessments, insufficient staff training, poor record-keeping, and failures in transaction monitoring.

The Scope and Impact of the External Audits

External audits, as defined under section 162 of the AML/CTF Act, are an essential regulatory tool used by AUSTRAC to independently assess whether a reporting entity is meeting its legal obligations. The appointed auditors—who must be independent and appropriately qualified—will assess each casino’s AML/CTF compliance across several dimensions:

• Effectiveness of the AML/CTF Program: Does the casino’s framework effectively identify, mitigate, and manage risks? Are the policies and procedures up-to-date and tailored to the casino’s business model?
• ML/TF Risk Assessment: Is the business regularly and adequately assessing the risk of money laundering and terrorism financing, considering customer profiles, products, services, and delivery channels?
• Board and Senior Management Oversight: Are those at the top adequately informed and engaged? Is there a clear chain of accountability?
• Customer Due Diligence and Monitoring: How robust are the procedures for verifying customer identity, monitoring transactions, and escalating suspicious activity?
• Ongoing Review and Reporting: Are there mechanisms in place for reviewing the effectiveness of controls and reporting breaches or deficiencies to AUSTRAC?

AUSTRAC’s guidance specifies that an independent auditor’s report must be delivered to both the reporting entity and the regulator. Based on these findings, AUSTRAC may choose to pursue further enforcement, ranging from enforceable undertakings to civil penalty proceedings, as was the case with other major Australian casinos.

Why Regional Casinos Are Under the Spotlight

AUSTRAC’s actions are a direct response to the broader risks posed by regional and smaller casinos, which may lack the compliance resources of larger urban operators. Despite this, such venues are not exempt from the reach of criminal networks seeking to launder illicit proceeds. Money laundering in casinos often involves layering—whereby criminal proceeds are broken up and disguised through gambling activities, making tracing and recovery difficult.

A key vulnerability identified by both AUSTRAC and international watchdogs lies in the use of gaming machines and chips to exchange cash for tokens or credits, which can then be cashed out or transferred. Without robust controls, even smaller casinos can become conduits for criminal finance. AUSTRAC’s CEO, Brendan Thomas, was explicit: “Money laundering harms our economy and it allows criminals to profit from some of the most awful crimes – we need to stamp it out.” This comment echoes ongoing concerns about the social harm caused by unchecked financial crime, including the funding of organized crime and its downstream impacts.

Recent Trends in Casino Enforcement and Regulatory Reform

AUSTRAC’s current approach is informed by several recent high-profile enforcement actions. In 2022, Crown Resorts agreed to pay a $450 million penalty after systemic AML/CTF failures were identified across its operations. Similarly, The Star Entertainment Group and SkyCity were subjected to court-enforceable undertakings and substantial remediation measures.

Reforms have also emerged from the findings of the Bergin Inquiry and the Finkelstein Royal Commission, both of which recommended sweeping changes to casino regulation, corporate governance, and AML/CTF oversight. These reports underscored the risks of complacency and the importance of a compliance culture that permeates all levels of the organization.

Moreover, the FATF’s 2022 evaluation of Australia highlighted improvements but also flagged persistent challenges, especially concerning beneficial ownership transparency and the role of gatekeeper professions, such as lawyers and accountants, who may facilitate criminal finance.

The Regulatory Landscape: AML/CTF Act and Rules

The foundation of Australia’s casino compliance regime is the AML/CTF Act 2006, complemented by the AML/CTF Rules and AUSTRAC’s extensive regulatory guidance. Key requirements include:

• Section 81: Obliges reporting entities to have and maintain an AML/CTF program.
• Section 41: Requires ongoing customer due diligence.
• Section 43: Mandates suspicious matter reporting.
• Section 162: Authorizes AUSTRAC to order external audits.

The AML/CTF Rules provide granular detail on the content of programs, risk assessments, and record-keeping. Non-compliance exposes entities to severe penalties, reputational harm, and—in extreme cases—loss of license or the imposition of government-appointed managers, as seen with Crown Melbourne.

Conclusion: Lessons for the Gambling Industry and Next Steps

AUSTRAC’s order for external audits at The Ville Resort-Casino and Mindil Beach Casino Resort represents a pivotal moment for regional casino compliance in Australia. These actions reflect a regulatory environment in which the cost of non-compliance is rising and the margin for error is shrinking. For casinos and gambling operators nationwide, the message is clear: proactive, risk-based compliance is no longer a best practice—it is an operational necessity.

Effective AML/CTF programs require robust risk assessment, engaged leadership, ongoing staff training, and a culture of vigilance. As the external audits progress, both casinos—and indeed the broader sector—will be closely watched for signs of meaningful change. AUSTRAC’s continued focus on the gambling industry ensures that operators cannot afford complacency. As enforcement expands beyond the high-profile cases of recent years, even smaller or regional operators must ensure their AML/CTF defenses are fully up to scratch.

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Related Links

• AUSTRAC: Official Guidance on Casinos
• Anti-Money Laundering and Counter-Terrorism Financing Act 2006
• FATF Mutual Evaluation Report: Australia 2022
• AUSTRAC Media Release: Casino Audits
• Australian Government: Gambling Reform

Other FinCrime Central News About AUSTRAC’s Stance on Gambling

• AUSTRAC CEO Focuses on Gambling Industry Compliance: Action Promised
• AUSTRAC Targets Entain Over Money Laundering Breaches
• MGM Resorts Hit With $8.5 Million Fine in Major Money Laundering Case

Source: AUSTRAC

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