Australia tackles money laundering through risk assessment

Government agencies across the globe take proactive measures against money laundering. Despite the efforts, criminal organizations still find a way to move billions of dollars through different businesses, effectively laundering proceeds obtained through unlawful activities.

But what is money laundering? The bureau of the United States Department of the Treasury that focuses on strengthening anti-money laundering and countering financing of terrorism, the Financial Crimes Enforcement Network (FinCEN), describes money laundering as a way to introduce money obtained through illicit activities "into the nation's legitimate financial systems."

Through money laundering, criminal organizations benefit from financial assets without them being related to the illegal activity that generated them. Such crimes are serious as they can impact a range of businesses without them even realizing it.

Money laundering targets banks, casinos

Generally speaking, banks are among the financial institutions that are most vulnerable to money laundering attempts. This is why international laws help combat such crimes through the establishment of know-your-customer (KYC), anti-money laundering (AML) and counter terrorism financing (CTF) policies.

Besides banks, casinos, regardless if online or brick-and-mortar, are also frequent targets of money laundering attempts. There's a range of methods criminal organizations can use to launder proceeds through casinos.

In some cases, ill-gained funds are deposited through online gambling accounts. The person would then conduct limited gambling activities before withdrawing the funds either through the same account or sending it to a different bank account as a means to cover the source of funds. Similar methods are used at land-based venues, although more gambling operators are imposing restrictions specifically for cash transactions.

The gambling sector in Australia is undergoing regulatory changes

Australia is one of the countries where there's an ongoing overhaul of the gambling sector. Changes to the regulations vary from one state to the other but their ultimate goal is to reduce problem gambling, gambling harm, as well as financial crimes related to the gambling sector.

With losses to pokies being in the hundreds of millions per month, the overall losses to gambling activities across Australia are in the billions annually. Those losses reaffirm the need for strict regulation that addresses gambling harm and problem gambling.

Last month, the country enforced a credit card ban applicable to gambling activities. The move came approximately six months after lawmakers approved such a ban on a federal level. Another method that also helps combat excessive gambling, as well as financial crimes is pre-verification checks applicable to online gambling activities.

Casinos identified as high risk of money laundering in Australia

Earlier this month, Australia's anti-money laundering and counter-terrorism financing regulator, AUSTRAC, released a national risk assessment report for 2024. In the recent report, the regulatory body highlighted a number of current and emerging threats.

The report pointed to a range of unlawful activities together with a rating and expected outlook. According to AUSTRAC, the report provided "a collective understanding of the scale, sophistication and threat of money laundering and terrorism financing in Australia."

Moreover, AUSTRAC pointed to the destructiveness of money laundering, revealing that it enables serious criminal activities to continue while allowing criminals to use profits obtained through crimes for further unlawful activities.

Illicit drugs, tax and revenue crime and government-funded program fraud topped the chart as activities with the highest potential for generating unlawful revenue. The outlook for all activities is also expected to increase, per the Money Laundering in Australia: National Risk Assessment report.

The casino sector also made it to the report, identified as a channel with a high risk of being used for money laundering. On the bright side, the outlook for the sector seems to be stable. This otherwise means that no surges in the attempts for money laundering through the gambling sector are expected, at least according to the report.

"Criminals continue to use established channels such as cash, luxury goods, real estate, domestic banks, casinos and remitters to launder funds in Australia," reads the recently released National Risk Assessment report.

AUSTRAC leads in the fight against money laundering

Back in January, Brendan Thomas started his five-year term as CEO of AUSTRAC. He recently spoke about the detrimental impact of money laundering on the country's financial system, highlighting the importance of combatting such unlawful activities.

"Crimes like money laundering and terrorism financing erode trust in Australia’s financial system and the security of the Australian population. Criminals might be persistent, but so are we," Thomas explained in a statement released earlier this month.

He pointed to AUSTRAC's relentless efforts against money laundering and terrorism financing, explaining that the regulator effectively collaborates with other regulatory bodies, national intelligence agencies and law enforcement.

This strategic collaboration enables the creation of robust risk assessments that can be used as guidelines when determining the risks related to money laundering for different sectors, explained Thomas.

AUSTRAC's boss said that based on estimates, the drug market in Australia is valued at AU$12.4b ($8.1b). "This money then needs to be laundered through the Australian economy, every single year," he added.

Thomas supported the additional efforts toward AML and CTF policies that help protect businesses and at the same time safeguard Australia's economy.

On a larger scale, money laundering can be prevented through collaboration between regulatory bodies such as AUSTRAC, law enforcement agencies and international courts. Still, in a world where many businesses operate entirely online, money laundering can be difficult to identify or trace but this doesn't mean that such crimes can go unnoticed.

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