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AUSTRAC Regulatory Guide
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return to chapter 11 - designated services
Chapter 11 - Designated services - Gambling services
Table 3 in section 6 of the AML/CTF Act contains 14 designated gambling services. This Guide has grouped the gambling services into two categories, 'betting' and 'betting accounts'. Each of these services is discussed below.
In addition to complying with the AML/CTF Act, the gambling sector is subject to state and territory regulation.
Betting
| Brief description of services
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- receiving or accepting bets
- making or placing bets on behalf of another person
- introducing people to a person or establishment which receives or accepts bets from the people being introduced
- paying out winnings
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The range of betting activities conducted within Australia is diverse and includes:
- thoroughbred, harness and greyhound racing
- approved sporting events
- table games
- electronic gaming machines
- keno, lotteries, bingo and other forms of minor gaming. (56)
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What is betting?
A person engages in betting (gambling) if they stake or risk something of value on the outcome of a contest of chance or a future contingent event not under their control or influence. This is done on an agreement or understanding that they or someone else will receive something of value in the event of a certain outcome. The major forms of gambling are wagering (racing and sports) and gaming (casinos, gaming machines, keno and lotteries).
The gambling sector includes the operation of licensed casinos, on-course bookmakers and totalisator agency boards (TABs) that provide a range of racing and sports betting facilities. There are also gaming machine operators and licensed online gambling services (for example, bookmakers authorised to conduct internet betting transactions ).
What are the designated services related to betting?
This section discusses betting in the context of items 1-10 in table 3 of the AML/CTF Act, as shown in the following table.
| 1 |
receiving or accepting a bet placed or made by a person, where the service is provided in the course of carrying on a business |
the person |
| 2 |
placing or making a bet on behalf of a person, where the service is provided in the course of carrying on a business |
the person |
| 3 |
introducing a person who wishes to make or place a bet to another person who is willing to receive or accept the bet, where the service is provided in the course of carrying on a business |
both:
(a) the person who wishes to make or place the bet; and
(b) the person who is willing to receive or accept the bet
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| 4 |
paying out winnings in respect of a bet, where the service is provided in the course of carrying on a business |
the person to whom the winnings are paid |
| 5 |
in the capacity of controller of an eligible gaming machine venue, allowing a person to play a game on a gaming machine located at the venue, where the service is provided in the course of carrying on a business
|
the person |
| 6 |
accepting the entry of a person into a game, where:
(a) the game is played for money or anything else of value; and
(b) the game is a game of chance or of mixed chance and skill; and
(c) the service is provided in the course of carrying on a business; and
(d) the game is not played on a gaming machine located at an eligible gaming machine venue
|
the person |
| 7 |
exchanging money for gaming chips or tokens, where the service is provided in the course of carrying on a business |
the person whose money is exchanged |
| 8 |
exchanging gaming chips or tokens for money, where the service is provided in the course of carrying on
a business |
the person whose gaming chips or tokens are exchanged |
| 9 |
paying out winnings, or awarding a prize, in respect of a game, where:
(a) the game is played for money or anything else of value; and
(b) the game is a game of chance or of mixed chance and skill; and
(c) the service is provided in the course of carrying on a business; and
(d) the game is not played on a gaming machine located at an eligible gaming machine venue |
the person to whom the winnings are paid or the prize is awarded |
| 10 |
in the capacity of controller of an eligible gaming machine venue, paying out winnings, or awarding a prize, in respect of a game, where:
(a) the game is played on a gaming machine located at the venue; and
(b) the winnings are paid out, or the prize is awarded, by the controller as agent of the owner or lessee of the gaming machine; and
(c) the service is provided in the course of carrying on a business |
the person to whom the winnings are paid or the prize is awarded |
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Exemptions
Chapter 10 of the AML/CTF Rules applies to casinos, on-course bookmakers and TABs, controllers of gaming machines and accounts for online gambling services. (57) The AML/CTF Rules set out special requirements relating to Part B of AML/CTF programs (customer identification) and record-keeping procedures for gambling services. These requirements are discussed in detail in AUSTRAC guidance note 08/03: Gambling services. (58)
What are the risk indicators for betting?
Betting activities can be used to facilitate money laundering through each of the three money laundering stages: placement, layering and integration and/or the financing of terrorism.(59) The following circumstances may indicate a risk of money laundering or terrorism financing occurring: (60)
- betting activity is inconsistent with the financial situation and/or known occupation of the person gambling
- purchase of winning tickets from other punters (gamblers)
- substantial cash redemptions of negotiable gaming chips despite the absence of, or minimal, gaming activity
- frequent deposits of personal bank cheques exchanged for chip purchase vouchers but limited gambling activity undertaken
- frequent deposits of gambling cheques followed by immediate withdrawal of funds with cash or cheques
- filling a gambling machine with credits and collecting the payouts with little gambling activity (this occurs particularly in VIP sections of gaming venues where there is no limit on credits)
- gambling chips handed to a third party for the purposes of redemption
- multiple chip redemptions on the same day
- purchasing and redeeming casino chips with no or little gaming activity
- a client depositing with either a bookmaker or a casino, substantial amounts of cash for gambling purposes, but requesting cheque for repayment of funds not used
- suspicious identification documentation presented for gambling purposes when opening an account.
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Case studies
Case study 13 |
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Company director deposits funds from betting and gambling activity
This case involved a company director whose business was claimed to have a low profit performance. Suspect transaction reports submitted to AUSTRAC by industry indicated that the director was involved in structuring activities and had large cash transactions.
In the course of enquiries, bank statements were provided, though not for all of the accounts identified. The statements indicated that the deposits had resulted from betting and gambling activities.
AUSTRAC information identified overseas transfers, which resulted in the identification of previously unknown overseas bank accounts and property assets. As a result, approximately AUD2 million in tax and penalties was raised.
Indicators: structuring of transactions; large cash transactions. |
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Case study 14 |
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Online betting used for money laundering
An online money laundering syndicate actively sought 'customers' by approaching criminal networks and offering to launder their money.
The syndicate involved a number of individuals who used a licensed betting company as a front to accept racing, sporting and entertainment bets by telephone and internet. The betting company's website contained a step-by-step guide to mobile betting, which explained that a link to a mobile betting application could be sent to the customer's mobile phone by submitting their phone number to the website.
The members transferred their funds via charge cards, credit cards and mobile phone payments to a related company, which was based in the Pacific islands to avoid detection by AUSTRAC. The related company then used wire transfers to transfer the funds back to the betting company back in Australia.
AUSTRAC analysis identified four individuals who made multiple funds transfers from various countries, as well as significant cash deposits and withdrawals.
Indicators: related company based in offshore jurisdiction; transfer of funds between related companies for non-operational reasons; use of a 'front' company. |
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Additional resources
Frequently asked questions
Q. If a person places a single cash bet of $10,000 or more with a bookmaker, does the bookmaker have any reporting obligations?
A. Yes, the bookmaker must complete a threshold transaction report (TTR). If the bookmaker forms a suspicion on reasonable grounds, he/she will also be required to submit a suspicious matter report.
Q. Is there a threshold which allows a person to bet on an electronic gaming machine or on a table game without requiring them to provide identification?
A. A patron may play a gaming machine or table game without being identified and does not need to be identified for any payout under $10,000. However, a reporting entity should identify a customer involved in transactions below this threshold if its enhanced customer due diligence program requires KYC information to be collected and verified in such circumstances A similar approach applies to on-course bookmakers and TABs; a customer may place a bet without being identified, and does not need to be identified when paying out winnings under $10,000.
Q. What are the reporting obligations if a gambling service provider pays out $10,000 or more in winnings?
A. If a single payout involves $10,000 or more in cash the gambling service provider must submit a threshold transaction report(TTR) to AUSTRAC. If the payout is made by cheque, or by a combination of cash under $10,000 and a cheque for the remainder, then no TTR is required. However, in those circumstances the customer must still be identified and verified because the combined payout is $10,000 or more.
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17-JAN-2012
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Betting accounts
| Brief description of services |
- providing betting accounts
- allowing a person to become a signatory to a new or existing betting account
- allowing transactions to be conducted on a
betting account |
What is a betting account?
Table 3 of section 6 of the AML/CTF Act covers the gambling sector and lists and describes 14 designated gambling services. This section focuses on items 11-14 of the designated services, which cover betting account facilities.
Opening a betting account can occur face-to-face or via the telephone or the internet. Online casinos, on-course bookmakers, corporate bookmakers, totalisator agency boards (TABs) and betting exchanges are examples of providers of betting accounts. In the case of casinos, betting accounts are generally provided to players who have established their credit rating. The person operating the account is restricted to banking personal or bank cheques for the purposes of gambling.
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What are the designated services relating to betting accounts?
This section discusses betting accounts in the context of items 11-14 in table 3 of the AML/CTF Act, as shown in the following table.
| 11
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in the capacity of account provider, opening an account, where:
(a) the account provider is a person who provides a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(b) the purpose, or one of the purposes, of the account is to facilitate the provision of a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(c) the service is provided in the course of carrying on a business
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the holder of the account
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| 12
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in the capacity of account provider for a new or existing account, allowing a person to become a signatory to the account, where:
(a) the account provider is a person who provides a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(b) the purpose, or one of the purposes, of the account is to facilitate the provision of a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(c) the service is provided in the course of carrying on a business
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the signatory
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| 13
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in the capacity of account provider for an account, allowing a transaction to be conducted in relation to the account, where:
(a) the account provider is a person who provides a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(b) the purpose, or one of the purposes, of the account is to facilitate the provision of a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(c) the service is provided in the course of carrying on a business
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both:
a) the holder of the account; and
b) each other signatory to the account |
| 14
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exchanging one currency (whether Australian or not) for another (whether Australian or not), where:
(a) the exchange is provided by a person who provides a service covered by item 1, 2, 3, 4, 6, 7, 8 or 9; and
(b) the service is provided in the course of carrying on a business
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the person whose currency is exchanged
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Gambling services are available to persons residing both in and outside the state or territory where the gambling activity is domiciled. Persons living outside the gambling jurisdiction may open and operate a gambling account. Betting accounts must be used for betting purposes only and not as a facility to deposit and hold funds.
On-course bookmakers, totalisators, corporate bookmakers and betting exchanges generally offer facilities to open a betting account. Whether an account enables betting services to be provided via the internet, telephone or face-to-face, the betting account provider is required to complete customer identification within a specific timeframe. If a betting account is only used for face-to-face and/or telephone betting, the betting account provider must identify the customer before providing the designated service. If the betting account is used for online gambling (this includes via the internet and/or the telephone), betting account providers have 90 days to complete customer identification provided no withdrawals are permitted on the account during this period.
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Exemptions
Chapter 10 of the AML/CTF Rules applies to casinos, on-course bookmakers and TABs, controllers of gaming machines and accounts for online gambling services which include betting exchanges. These rules set out special requirements relating to Part B of AML/CTF programs and record-keeping procedures for gambling services.
Part 10.4 of the AML/CTF Rules applies to an online gambling service. It establishes that reporting entities have a 90-day period to identify and verify the customer, provided the reporting entity does not permit the customer to withdraw any funds prior to carrying out the identification procedure. These requirements are discussed in detail in the AUSTRAC guidance note 8/03: Gambling services. (61)
Important |
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The customer identification exemptions do not apply where the casino, bookmaker, TAB operator or gaming machine provider determines, in accordance with its enhanced customer due diligence program, that it should obtain and verify KYC information about a customer. |
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What are the risk indicators for betting accounts?
A range of typologies indicate that betting accounts can be used to facilitate money laundering and/or the financing of terrorism. In particular, an account can be opened by one individual and used by others. An individual may also operate more than one account. The following circumstances may indicate a risk of money laundering or terrorism financing occurring:(62)
- deposits by third parties into a casino account operated by an individual
- use of fraudulent credit cards to deposit funds into betting account
- frequent deposits of gambling cheques followed by immediate withdrawal of funds with cash
- transfers from company accounts to private betting accounts
- multiple negotiable-chip redemptions for cash or gaming cheques on the same day
- use of betting accounts as de-facto savings and deposit accounts
- client providing bookmakers or casino with substantial amounts of cash for gambling purposes, but requesting cheque for repayment of funds not used.
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Case studies
Case study 15 |
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Bank employee gambles millions from clients accounts
An investigation into a bank employee who gambled millions of dollars from clients' accounts was initiated as a direct result of financial transaction report (FTR) information. The suspect used his knowledge of the bank's internal procedures to discreetly transfer funds from customers' accounts to his personal account.
Over a period of time, these funds were deposited into his casino account in the form of bank cheques made out in his name. The casino lodged FTRs in relation to the regular deposit of bank cheques. The same casino had also previously lodged reports when the suspect had placed bets of AUD 9,000 to avoid the AUD 10,000 reporting threshold. As a result of the investigation, the suspect was charged with three counts of money laundering and 37 counts of fraud.
Indicators: structuring; regular deposits of bank cheques into casino account. |
Case study 16 |
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Overseas nationals purchase wining jackpots with illegal proceeds
AUSTRAC referred a matter relating to a group of overseas nationals buying winning jackpots at various clubs in Sydney. The suspects deposited approximately AUD1.7 million in winning cheques within a year, immediately withdrawing money in cash afterwards. The source of the funds used to buy winning jackpots was suspected to be from illegal means.
Indicators: purchasing winning jackpots; depositing winning cheques followed by immediate withdrawal. |
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Additional resources
Frequently asked questions
Q. If I allow a person to bet on credit, subject to meeting any specific gambling jurisdictional requirements, am I providing a designated service under the AML/CTF Act?
A. Yes, if you are providing credit you are providing a betting account and therefore must carry out the applicable customer identification procedures.
Q. If I am allowing a high net-worth player into the casino to bet, what processes must I follow to comply with the AML/CTF Act?
A. The high net-worth player will need to be identified if they either open an account or make a bet of $10,000 or more, or receive winnings of $10,000 and/or purchase or redeem gaming chips of an amount of $10,000 or more.
Q. What type of identification do I need to sight and verify to complete the KYC obligations?
A. You need to sight reliable and independent documentation. Chapter 1 of the AML/CTF Rules states that reliable and independent documentation includes, but is not limited to, an original primary photographic identification document, an original primary non-photographic identification document and an original secondary identification document. You may rely upon other documents not listed above as reliable and independent documents, where that is appropriate having regard to the money laundering and terrorism financing risk.
For example, the minimum applicable identification for individuals that you must collect includes: customer's full name, date of birth and residential address. You must also verify a customer's full name and either date of birth or residential address. It is important to note that you may need to collect additional KYC information depending on risk.
Q. What am I required to do when an individual wishes to open a betting account?
A. When an individual wishes to open a betting account, you need to apply the applicable customer identification procedures as specified in your AML/CTF program. If a betting account is only used for face-to-face and/or telephone betting, the betting account provider must identify the customer before providing the designated service. If the betting account is used for online gambling (this includes via the internet and/or the telephone), betting account providers have 90 days to complete customer identification provided no withdrawals are permitted on the account during this period.
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153 These forms of gaming are excluded under the AML/CTF legislation.
154 This excludes gaming such as bingo, lotteries or keno.
155 AUSTRAC guidance note 08/03: Gambling services at www.austrac.gov.au/guidance_notes.html.
156 See chapter 1 of this Guide for details on the concepts of money laundering and financing of terrorism.
157 This list is not exhaustive and reporting entities, through risk-based processes, may identify additional indicators within their systems. AUSTRAC, through its research on typologies, will continue to release additional case information and indicators (red flags) as identified.
158 AUSTRAC guidance note 08/03: Gambling services at www.austrac.gov.au/guidance_notes.html.
159 This list is not exhaustive and reporting entities, through risk-based processes, may identify additional indicators within their systems. AUSTRAC, through its research on typologies, will continue to release additional case information and indicators (red flags) as identified.
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Designated services (home)| Financial services | Bullion
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04-NOV-2009
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