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The Guardian - AU
The Guardian - AU
Michael McGowan

NSW poker machine laws may increase risk of money laundering, says crime commission

A gambler sitting at a bank of poker machines
The NSW Crime Commission says tickets used to redeem money from poker machines – which are anonymous if less than $5000 is claimed – as a potential tool for criminal activity. Photograph: Dan Peled/AAP

The New South Wales Crime Commission has suggested some of the state’s gambling laws have increased the risk of money laundering through poker machines, while raising the prospect of “significantly” reducing their credit limits in clubs.

This comes as anti-gambling advocates dismissed an “utterly cynical” proposal from lobby group Clubs NSW for a new “code of practice” that would allow family members of gambling addicts to request they be banned from venues.

In December the Crime Commission, which has royal commission-style powers and investigates serious crime, announced it would run a dedicated inquiry into money laundering via the state’s poker machines.

In a quietly released issues paper the commission asked whether poker machine credit limits should be “significantly reduced”.

The commission said a “lack of detail and transparency” around gambling machine tickets in NSW works to create a “potential avenue” for illegal activity, while other laws inadvertently “increase the vulnerability of the sector by people seeking to launder money”.

The commission pointed to the use of the tickets to redeem money from poker machines as a potential tool for criminal activity.

The tickets are anonymous if less than $5,000 is claimed, and do not tally how much money is put through a machine, or the amount won or lost.

The commission said a person could put $5,000 from the proceeds of crime into an electronic gaming machine (EGM), place one losing bet of $5, and then redeem the ticket in cash. In the scenario, the ticket displays the “cash out amount” – but not the $5 bet.

“The person repeats this process several times a week at different licensed venues,” the paper states. “If questioned by law enforcement about the source of cash in their possession, the person produces photos of their tickets.”

The commission said other laws actually increased the ability for criminal groups to launder money through poker machines, as winnings above $5,000 must be paid out in a bank transfer or cheque by the club.

But those payments do not track how much money is played into a poker machine.

“The effect of these requirements is that money inserted into an EGM by a person and later redeemed by that person is characterised as ‘prize money’, regardless of the fact that the money has some other source, including a nefarious one,” the paper states.

The same requirement applies in situations where “there were no actual winnings at all”.

“In this sense, the statutory scheme itself requires venues to apply rules which increase the vulnerability of the sector by people seeking to launder money,” it says.

The release of the paper coincides with the release of Clubs NSW’s proposed code of practice.

The code, which has already been welcomed by the NSW government, would also include having responsible gambling officers in every club, and training staff to spot problem gambling.

But Tim Costello from the Alliance for Gambling Reform dismissed the new code as “too little too late”, describing it as a “deliberate distraction” amid the Crime Commission’s inquiry.

“They’re terrified,” Costello said.

“They could have made these changes years ago but the fact is the inquiry is looking very closely at how poker machines facilitate money laundering in NSW and this is an utterly cynical diversion.”

The issues paper said credit limits on pokies in NSW are significantly higher than in other states.

The credit limit in NSW – the amount players can “load-up” before playing – ranges from $5,000 for newer poker machines and as much as $9,999 in older machines.

In Victoria and the Northern Territory the limit is $1,000, while Queensland’s is $100 and South Australia’s is $99.99.

The commission questions whether the “relatively higher limits” in NSW make it an attractive destination for money launderers.

“Lowering the credit limit would reduce the amount of cash that can be inserted into an EGM at any one time, thereby making it harder for criminals to cleanse illicit money by claiming it back via a ‘winning’ ticket or cheque,” it said.

Clubs NSW has been contacted for comment.

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