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AUSTRAC CEO Focuses on Gambling Industry Compliance: Action Promised

AUSTRAC, Australia’s primary anti-money laundering (AML) and counter-terrorism financing (CTF) regulator, is intensifying its focus on the gambling sector. In his recent keynote address at the “Regulating the Game” conference, AUSTRAC CEO Brendan Thomas made it clear that gambling companies must take compliance seriously or face significant consequences. His speech highlighted the ongoing challenges the gambling industry faces in terms of AML/CTF compliance and the consequences of non-compliance.

As the gambling sector continues to evolve, particularly with the rise of online gambling platforms, AUSTRAC remains vigilant. The regulator is not just focused on monitoring compliance but is also ready to take swift and decisive action when necessary. This article explores the challenges the gambling industry faces, AUSTRAC’s approach to compliance, and what the future holds for gambling operators in Australia.

During his address, Brendan Thomas emphasized AUSTRAC’s unyielding commitment to ensuring the gambling industry adheres to its regulatory obligations. He underscored that although the regulator had been actively working with industry players to improve compliance, AUSTRAC was not in the business of merely educating businesses on their responsibilities. The message was clear: businesses that fail to comply will face serious consequences.

“I’ve been the CEO of AUSTRAC for just over a year and I’m so proud of the work that we’ve done in that time to reduce the harms to our community,” said Thomas. “But while I’ve been working with the industry and our reporting entities to reduce that harm, AUSTRAC is not in the business of continuing to educate without action.”

This statement sets the tone for AUSTRAC’s future actions. It signals that the regulator will not hesitate to impose penalties on businesses that neglect their legal obligations, no matter their size. AUSTRAC is committed to ensuring that all gambling operators understand their responsibilities under Australian law, and those who fail to comply can expect swift regulatory action.

Regulatory Evolution in the Gambling Industry

The Australian gambling landscape is complex, with licensed operators facing numerous challenges related to AML/CTF compliance. According to Thomas, the risks facing the industry are evolving, particularly with the digitization of currency and financial systems. He stressed the need for gambling operators to conduct thorough risk assessments to identify potential vulnerabilities within their businesses.

“The risk landscape continues to evolve with the digitization of currency, more complex financial systems, and the increased competition within the online gaming sector,” Thomas stated. These changes require gambling operators to adopt more sophisticated customer verification processes and risk management strategies to ensure compliance with the latest regulations.

In response to these challenges, AUSTRAC is aiming to shift its regulatory approach. Thomas explained that the agency is moving away from a purely compliance-based model toward one focused on assessing and mitigating risks. The goal is to engage with operators in meaningful discussions about the risks they face and collaborate on the best ways to address them.

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024

A key development in AUSTRAC’s approach to regulation is the passage of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. This bill, which updated the previous 2006 legislation, expands AUSTRAC’s jurisdiction to include new industries such as real estate, law, accounting, and dealers in precious metals and stones.

However, the bill also introduced more stringent compliance requirements for existing regulated sectors, including the gambling industry. The gambling sector must now navigate these new regulations while continuing to ensure compliance with their pre-existing obligations under the AML/CTF framework.

“We’re trying to shift the way that we do regulation in our regulated industries away from pure compliance to a proper discussion about risk,” Thomas explained. “This allows us to focus on controls that directly address those risks rather than just ticking compliance boxes.”

This evolution reflects AUSTRAC’s desire to streamline its processes and reduce bureaucracy, allowing it to focus more on practical outcomes and less on compliance paperwork. By aligning its regulatory efforts with an understanding of the real risks, AUSTRAC hopes to create a more effective and collaborative approach to fighting financial crime in the gambling industry.

AUSTRAC’s Approach to Partnerships and Transparency

While AUSTRAC is taking a tougher stance on non-compliance, it is also working to improve its relationships with regulated industries. Thomas mentioned that the regulator is making significant changes to improve transparency and communication with the gambling sector and other industries.

“In the past, we haven’t done that, and we are committed to working in partnership with those industries that want to comply with the law,” he stated. AUSTRAC is focused on building stronger partnerships with industry players to help them navigate the complex regulatory landscape and ensure that businesses have the guidance they need to meet their obligations.

One of the ways AUSTRAC plans to improve communication is by establishing dedicated functions aimed at fostering collaboration with regulated industries. The regulator aims to be more transparent about its legal position on various issues and provide clearer guidance to businesses on how to meet their compliance obligations.

The Impact of Gambling Industry Non-Compliance

Thomas also highlighted the serious consequences of non-compliance within the gambling industry. He pointed to the harmful effects of illicit funds being funneled through gambling operations, including the reinvestment of those funds into further criminal activities. He noted that these criminal activities can range from drug trafficking and human trafficking to scams and child sexual exploitation.

“There is no question on where [illegal] funds come from and how those funds are impacting Australians,” Thomas stated. “There is the crime that leads to profits in the first place and then the reinvestment of those profits into more crime.” He emphasized the significant role the gambling industry plays in helping to combat these problems, calling on operators to be vigilant in their efforts to prevent money laundering and other financial crimes.

As the gambling sector continues to expand, especially in the online space, the risks associated with money laundering and terrorism financing will only grow. AUSTRAC’s tough stance and commitment to enforcing compliance reflect the agency’s determination to protect Australians from the harmful effects of financial crime.

Conclusion: The Future of Gambling Industry Regulation in Australia

In conclusion, AUSTRAC’s commitment to regulating the gambling industry and ensuring compliance with AML/CTF obligations is unwavering. The regulator’s proactive approach, focusing on risk assessment and improved communication with industry players, is a step toward a more effective and streamlined regulatory environment. Gambling operators must understand that non-compliance will no longer be tolerated, and those who fail to meet their obligations can expect swift and decisive action.

As the industry continues to evolve, AUSTRAC’s role in safeguarding the community from financial crime will remain critical. Operators must adapt to the changing landscape by implementing robust risk management strategies and ensuring they are compliant with the latest regulatory requirements. By doing so, they will not only protect their businesses from regulatory penalties but also contribute to a safer and more secure gambling environment for all Australians.