AUSTRAC fires warning shot at AML/CTF reporting entities

On 30 July 2025, AUSTRAC launched civil penalty proceedings in the Federal Court against Mount Pritchard & District Community Club (Mounties) for what it described as ‘serious and systemic non-compliance’ with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act). Mounties operates a number of licensed clubs in New South Wales. 

These clubs provide customers with access to poker machines, which is a ‘designated service’ under the Act. Accordingly, Mounties is required to comply with the Act, including the obligation to adopt and maintain an AML/CTF Program (Program) that complies with the Act and the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1) (Rules).

Mounties engaged Betsafe Pty Ltd, to create, maintain and update its Program as part of a full suite of AML/CTF services which included conducting AML/CTF risk assessments, advising on suspicious matters, designing an AML/CTF risk awareness program and carrying out the relevant training to Mounties management and employees. 

When AUSTRAC evaluated the Program it observed that: 

• The Program was general and lacking in detail. It did not explain or provide any specific methodology for how Mounties could identify and assess ML/TF risks relevant to its business. Nor did it explain the measures to be deployed by Mounties to mitigate or manage the risks that the Program identified. AUSTRAC noted the Program did not enable Mounties to adequately ‘understand, recognise, identify, mitigate and manage the ML/TF risks it would reasonably face in the course of its business’, as required by the Rules.
• The AML/CTF Risk Awareness Training Program within the Program did not adequately consider the specific nature of Mounties’ business. As a result, it was not aligned with the specific ML/TF risks that Mounties might have reasonably faced. These included risks relating to customers who may be gambling or transferring the proceeds of crime, or gambling and transferring money in a way that was inconsistent with their known profile.

As a result, the training program did not adequately enable employees to understand the ML/TF risks that Mounties faces, the procedures for managing these risks, Mounties general AML/CTF obligations, and the consequence of non-compliance, as required by the Rules.

• The Transaction Monitoring Program (TMP) within the Mounties Program was too vague, in a way that a person referring to Mounties' TMP could not logically follow the steps required to monitor the transactions of customers. For example, the TMP did not set out any criteria for identifying transactions that were suspicious and made no reference to the circumstances set out under the Act that would cause a person to suspect on reasonable grounds that a suspicious matter had arisen. It also did not clearly identify which staff members were responsible for which monitoring actions or which procedures were put in place to ensure each action was carried out. 

AUSTRAC’s primary allegation was the purported AML/CTF Program adopted by Mounties lacked the defining characteristics of an AML/CTF program required by the Act in contravention of the Act. This meant Mounties had effectively provided designated services without having in place an AML/CTF program. 

In addition to identifying deficiencies in Mounties’ Program, AUSTRAC criticised the adequacy of the periodic reviews Mounties conducted in relation to its Program. Under the Rules, an entity’s program must be subjected to regular independent reviews that assess the effectiveness of the program, its compliance with the Rules and the reporting entity’s compliance with their program. 

When AUSTRAC evaluated the independent reviews conducted between 2019 and 2023, they were found inadequate because, among other things, the reviews did not:

• review, test, or verify the efficacy of the steps taken by Mounties to implement its Program;
• engage the board or senior management; or
• analyse the nature of Mounties’ business and the manner in which it sought to comply with its Program.

AUSTRAC has sought declaratory relief from the Federal Court as well as orders for civil pecuniary penalties under the Act. 

To learn more about the AML/CTF reforms, discuss your organisation’s obligations or get support with improving your program and arranging independent reviews, please reach out to our team.