AUSTRAC’s enforcement action against Westpac alleged extensive breaches of Australian anti-money laundering laws and surfaced inter alia serious and systemic reporting and due diligence failures resulting in the then chief executive and chairman’s separation when proceedings were initiated in late 2019.
The recent agreement between the parties to settle the matter for $1.3 billion, subject to court approval, secures the most significant penalty in Australian corporate history and cements AUSTRAC’s position as a regulator to be reckoned with underscoring the gravity of failing to comply with Australia’s anti-money laundering laws.
The escalating significance of financial penalties for anti-money laundering failures starts with the entirely respectable $45 million civil penalty awarded against Tabcorp in May 2017 which was AUSTRAC’s debutante moment, shedding its place at the kids table to start adulting in the regulatory big league. As much as this outcome was a watershed in Australian anti-money laundering enforcement, it was eclipsed in June 2018 by the Commonwealth Bank agreeing to pay $702.5 million as a civil penalty for extensive breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act including transaction report failings and late or non-submission of suspicious matter reports.
These regulatory missteps could be relegated to the annals of Australian anti-money laundering calamities, and perhaps cause limited concern for gaming related venues, but for the confluence of Westpac settling its matter for a herculean sum and a series of notable admissions concerning inadequate anti-money laundering oversight and associated failings arising at the NSW Inquiry into Crown Resorts conduct and suitability to hold a casino licence, under section 143 of the Casino Control Act 1992.
If it was not already abundantly clear that gaming related venues cannot afford to be inattentive to their anti-money laundering obligations, AUSTRAC’s CEO publicly declared it is contemplating enforcement action against a major non-banking financial institution this financial year. With the colour of admissions surfacing at the Inquiry regarding sophisticated casino operations, it illuminates the scale of potential issues in the wider gambling sector.
On one view, AUSTRAC has satiated its immediate concerns, positively influenced compliance culture, achieving impactful deterrence in the financial services space, and shunted corporate Australia to AML attention. However, the AML regulator now has the capacity and swagger to shift its regulatory lens and confront AML risks across other sectors and organisations.
AUSTRAC’s litigation success and its assertive regulatory posture is a clarion call for gambling operators to take meaningful steps to harden their operations against money laundering risks. This means operators need to have a fit for purpose AML/CTF Program and maintain ongoing oversight to ensure its effective implementation. An AML/CTF Program is required to identify, mitigate, and manage the operator’s money laundering and terrorism financing risk and must be informed by a specific money laundering and terrorism financing risk assessment.
This means that each operator’s AML/CTF Program will be different, and an off the shelf product that ostensibly ticks a box, is unlikely to be adequate to manage its specific risks or satisfy regulatory obligations.
The importance of anti-money laundering compliance is ascendant, and operators ought to be hastening deliberately, and where appropriate, partnering with a trusted adviser to ensure they understand their obligations and their environment is resilient to criminal exploitation for the purposes of money laundering. Some key inquiries to make include:
· Have you undertaken an AML/CTF risk assessment?
· Do you have a fit for purpose AML/CTF Program?
· Has your AML/CTF Program been formally adopted?
· Has your AML/CTF Program been effectively implemented?
· Are you aware of, and are you meeting, your AML/CTF reporting obligations?
· Have your employees received AML/CTF Risk Awareness training?
· Has your AML/CTF Program been subject to regular independent review?
If I were to place more weight on one of these matters, particularly for entities with a more mature program, it would be subjecting your AML/CTF Program to regular independent review. If an operator’s AML/CTF program has not been independently reviewed within the past 3 years and/or the program is based on 2009 risk management standards, then an independent review should be a priority to mitigate any risk.
If you would like to have a confidential discussion about your AML/CTF requirements, including in respect of independent reviews, Senet has partnered with CurbyMcLintock to marshal anti-money laundering, regulatory and investigative expertise to help organisations build AML/CTF competency and ensure your operations are resilient to money laundering and terrorism financing risks. You can contact Paul Newson at email@example.com or on 0428 563 376 or Paul Curby at firstname.lastname@example.org or on 0401 187 558.