Even as the nation gets ready for significant changes to its AML system later this month, Australia's anti-money laundering agency has cautioned gambling businesses that systemic flaws in compliance systems are still being used by criminals.
AUSTRAC (Australian Transaction Reports and Analysis Center) Chief Executive Brendan Thomas stated at the Regulating the Game 2026 conference in Sydney that gambling is still a crucial front-line industry in the battle against financial crime, but he also pointed out a number of persistent compliance issues found during regulatory work with operators. Thomas informed the delegates that "gambling is deeply embedded in Australia's social fabric and in our economy." "However, criminals who want to transfer illegal funds through legal financial channels frequently target it."
AUSTRAC serves as Australia's financial intelligence unit as well as its anti-money laundering and counterterrorism financing (AML/CTF) regulator.
According to Thomas, Australia's robust banking system, stable political climate, and thriving gaming industry make it appealing to both legitimate businesses and criminal networks looking to integrate and store illicit gains.
In order to transfer money, criminals around the world still rely on reliable financial channels that are integrated into legal economic activities. Although police are witnessing an increase in activities connected to tax offenses, government program fraud, illicit tobacco sales, and the revenues of multinational scam operations, drug trafficking continues to be Australia's greatest source of money laundering. According to Thomas, "financial crime today is not a series of isolated events." "It functions as a highly adaptive, professional, and interconnected system."
He cautioned that criminal networks are increasingly using digital payments, intricate corporate structures, and reputable companies to swiftly transfer money across countries and industries. Australia can serve as both a target and a transit point for illegal finance due to its robust commerce, migration, and financial ties throughout the Asia-Pacific region. Gambling operators still face high risks in that environment.
#Foundations of confidence
According to Thomas, criminals looking to launder money have options due to high transaction volumes, growing digital products, and cash-intensive channels. In the industry, the classic money laundering cycle of placement, layering, and integration is still quite important. As a result, operators must verify and identify customers, evaluate beneficial ownership, keep an eye on transactions, carry out additional due diligence in high-risk situations, and report suspicious matters to the regulator.
Thomas stated, "These responsibilities are not administrative obstacles." "They are pillars of trust that safeguard both your operating license and Australia's standing as a respectable and safe place to do business." AUSTRAC continues to find recurrent patterns of deficiencies during regulatory assessments of gambling and wagering enterprises, notwithstanding advancements in certain areas of the industry.
#Vulnerability areas
Large sums of money being transferred through gambling establishments is one of the most enduring problems. Through repeated transactions, AUSTRAC has seen clients deposit and withdraw enormous amounts, often millions of dollars, across a number of operators. Prepaid cards, vouchers, and other opaque mechanisms that concealed the source of funds were used in certain instances.
Authorities also discovered a practice known as "bill-stuffing," in which substantial sums of money are put into machines (pokies) with little to no gameplay before being taken out as seemingly valid winners. According to Thomas, "these behaviors were evident, consistent, and highly indicative of money laundering risk."
The use of several accounts and third parties to conceal the ownership of money is another persistent issue. Customers operating multiple accounts under various identities and frequent third-party deposits and withdrawals have been detected by regulators. Operators find it challenging to determine who ultimately owns the funds as a result of such arrangement.
In certain instances, high-risk clients also carry out transactions in spite of negative media attention, criminal records, or ongoing police investigations. In certain cases, even after assets had been seized or restrained by law enforcement, people connected to severe organized criminal groups were still able to gamble.
A significant vulnerability was also identified as weak source-of-wealth and source-of-funds checks. According to Thomas, several operators neglected to confront high-value customers who made sizable deposits without offering reliable justifications for the funds' origins. He claimed that even in cases when money laundering dangers were evident, "enhanced due diligence was delayed or never effectively completed."
International payment systems and cash-like products are making those hazards worse. If restrictions are weak, money can flow swiftly through gaming sites with little transparency using prepaid cards, payout cards, vouchers, and foreign accounts.
#What could be made better?
Additionally, AUSTRAC has discovered that some companies' transaction monitoring systems have not kept up with changing dangers. Instead of using organized, risk-based methods, monitoring in certain locations still mostly depends on staff members' manual observation. Sometimes alerts go unanswered, thresholds don't accurately reflect danger levels, and staff members aren't given clear instructions on how to escalate a situation.
Certain investigations have also shown staff conflicts of interest and wrongdoing, such as situations in which workers took commissions or cash payments from clients. According to Thomas,
""controls break down when incentives align with high-risk behavior."
Failures to report have made the issue worse. Despite persistent suspicious activity, AUSTRAC has found instances when threshold transaction reports or suspicious matter reports were ignored, delayed, or not repeated. In other cases, despite the identification of hazards, accounts remained open and regulatory recommendations were not followed.
The regulator also discovered that certain operators had neglected to update AML programs in response to regulatory findings or perform thorough money laundering risk assessments at the organizational level. According to Thomas,
""these risks were significant, they were known, and they were realized in practice."
Additionally, he cautioned operators about the increasing practice of contracting out financial crime and AML services to outside vendors without sufficient supervision.
Thomas stressed that although outsourcing might be effective and scalable, the licensed operator is always ultimately responsible for compliance.
""We are witnessing instances where risks are overlooked, alerts are closed without sufficient scrutiny, and subpar work by third-party providers goes unchallenged," he stated.
""When that occurs, the company bears full responsibility for the failure."Future modifications
On March 31st, Australia's amended AML/CTF Act will go into force, imposing new compliance requirements on regulated organizations. Given the scope of the reforms and the short implementation timeline, Thomas stated that AUSTRAC would adopt a practical and risk-focused strategy during the transition phase. "Perfection is not expected, but preparation is," he stated.
Regulators will, however, demand that companies show real progress in recognizing and reducing risks. Where controls are effective, operators should keep them in place, and where gaps still exist, they should put realistic remedial plans in place. According to him, the strategies ought to pinpoint flaws, allocate responsibility, and receive approval from boards and senior management.
Thomas made it plain that if major risks are not handled, regulatory action will follow. AUSTRAC will support the sector during the transition by offering tools, training, and direction. He declared,
""This reform is not about paperwork." "It is about more robust systems, improved controls, and stronger detection.”