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Tuesday, 30 October 2012
Page: 8429


Senator XENOPHON (South Australia) (16:09): I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

Senator XENOPHON: I table an explanatory memorandum, and I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The aim of the Anti-Money Laundering Amendment (Gaming Machine Venues) Bill 2012 is to reduce the activity of money laundering in gambling venues by amending the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

In September this year, journalists Chip Le Grand and Adam Shand from The Australian revealed that a Melbourne hotel had failed to act on suspicions of money laundering through its poker machines, even though there were records showing an individual and his family were claiming winnings of up to $40,000 per week.

Anyone who knows anything about poker machines will tell you these odds are impossible.

This article was only the most recent in a long history of stories and warnings about the vulnerabilities of poker machines to money launderers.

In 2010, Vanda Carson of the Sydney Morning Herald wrote that "industry sources estimate that nearly $2 billion a year is laundered through hotel, club and casino poker machines and gambling chips. As much as 40 percent of this is laundered in New South Wales."

Whilst that figure cannot be independently verified, it does highlight a systemic issue—the ease with which money can be laundered through poker machines.

According to the current laws, gambling venue owners are supposed to report suspicious transactions, but there is no legal obligation.

Usually, the most common way for criminals to launder money through the pokies is simply to load up the machine with a large amount of cash, play a few games and lose a small amount of money, and then cash out the remaining credits.

In New South Wales, for example, up to $10,000 can be loaded onto a machine at one time. If the amount is just under $10,000 it currently escapes the reporting requirements for AUSTRAC.

Depending on the regulations in each state, careful 'playing' can ensure the criminal walks out with thousands of dollars in 'clean' money.

A second option for criminals, usually used in combination with the first, is to wait around venues until a gambler wins a prize. Depending on the regulations, winnings over a certain amount are issued by cheque, to make sure that gamblers have a cooling-off period while the cheque processes, so they don't gamble their winnings.

Instead, criminals approach gamblers and offer to buy the cheques off them for cash (often at a discount), which the gambler can then immediately use to play. The launderers then cash the cheques, which have been signed over by the original claimant.

This bill aims to address both avenues through various measures.

Firstly, the bill inserts a new definition of 'gaming machine credit' to ensure that both winnings and unplayed credits are captured by the provisions in the bill.

Secondly, the bill inserts two new paragraphs into the definition of 'threshold transaction'. Under the Act, a threshold transaction is one that must be reported in the required form to AUSTRAC. This reporting usually includes relevant personal details and details of the transaction itself.

These two new paragraphs will mean that any payout of winnings or gaming machine credits totalling over $1,000 in a gambling venue will be a threshold transaction, and therefore reportable to AUSTRAC.

They also require the cashing of any cheque that is a payout from a gambling venue and where the cheque has been transferred to another person to be a threshold transaction.

It is important to note that the very nature of poker machines means this will not be an undue burden on venues. Poker machines rarely pay out in large amounts, and instead are generally programmed to provide smaller, interspersed wins in normal use.

Creating these two new definitions of threshold transactions will allow AUSTRAC access to information relating to large wins, and will show up particular patterns or habits that will be vital in the organisation’s crime prevention activities.

Thirdly, the bill also amends the Act so that the controller of a gaming machine venue will be considered to be providing a 'designated service' under the Act. This will mean controllers of gaming machine venues will be required to abide by the laws surrounding threshold transactions.

Lastly, the bill inserts a new subsection, which requires gaming machine venues to issue cheques for payouts of winnings or gaming machine credits over $1,000. The cheques must also indicate that they have been used for this purpose, so that they can be identified if signed over to another party. Failure to do so will result in two years' imprisonment or a fine of 120 penalty units.

Currently, poker machines are a soft target for money launderers. The ability to load them up with large amounts of cash, as well as the often lax regulations surrounding payouts, mean that launderers can, and do, take advantage of the system. The fact that no or very little face-to-face contact with staff is required also advantages criminals in these situations.

AUSTRAC already has regulations in place relating to some forms of gambling, including sports betting and casinos. These additional safeguards are a way to plug a loophole in the law, as well as protecting problem gamblers and venue owners.

Ultimately, poker machines cause enough harm in our communities without being a soft touch for crimes such as money laundering. This bill is an important step in reducing this risk.

Senator XENOPHON: I seek leave to continue my remarks later.

Leave granted; debate adjourned.