Pokie-addicted crims pouring dirty money worth billions through NSW

Everyone thought they were laundering billions in dirty money but a new crime commission report has exposed the real reason.

Criminals are pouring billions of dollars of dirty money into NSW poker machines hooked as gambling addicts and not because they’re laundering money, according to an extensive report by the NSW Crime Commission.

It has recommended the government introduce a cashless gaming card linked to bank accounts to stamp out money from drug dealers being spent in pokie rooms throughout the state.

“They were not seeking to disguise or “wash” the origin of the cash but, instead, were using the cash proceeds of their crimes to gamble,” the report reveals.

The “spending” of proceeds of crime is illegal under the Crimes Act and currently some clubs and pubs are failing to take sufficient steps to prevent this, it says.

NSW Crime Commissioner Michael Barnes, who led a multi-agency inquiry, said poker machines encouraged criminal behaviour which can be reduced by the introduction of cashless gaming cards.

“It would shut down one of the last avenues criminals can spend their illegal cash,’’ he said.

“At the moment serious offenders can enter NSW pubs and clubs, sit down next to patrons in gaming rooms, and openly feed large sums of cash from their crimes into poker machines with no real fear of detection.

“The lack of traceable data collected by EGMs means the exact scale of this criminal activity is impossible to determine but it is clear from our investigations it involves many billions of dollars every year.

“These basic reforms will help exclude vast sums of dirty cash that are primarily the proceeds of drug dealing. I’m sure venues won’t argue they should keep receiving that,” Mr Barnes said.

Criminals are pouring billions of dollars of dirty money into NSW poker machines hooked as gambling addicts. Picture: Sixty Minutes

“Where that money that criminals are now spending on poker machines will go is hard to predict, but it will make their life harder,” he said.

The report has been in the hands of the government for the past week.

In the recommendations from the inquiry, called Project Islington, it said the cards should be able to record amounts, times, turnover losses/wins and games played against a player card. It should also link the card to bank accounts and limit changing accounts, placing a limit of an extra $1000 cash a day to be loaded onto a player card.

Before the investigation it was a common belief that criminals were involved in cash in/cash out operations to clean money by feeding money into machines, cash them in as winnings straight away.

A Canadian report found it would take 40 hours to feed $1m into a machine.

It also said CCTV footage of large groups swarming into gaming rooms and playing multiple machines was in fact groups trying to “jackpot hunting’’ when linked machines had big payouts about to go off.

The Crime Commission interviewed organised crime figures and outlaw motorcycle gang members suspected of using poker machines to launder money. In most cases they found criminals were just gambling with dirty money and not involved in systematic money laundering.

“A number told us they began drug dealing to feed their gambling addiction,” Mr Barnes said.

The report had case studies where individuals would gamble $10,000 a day through the machines but told the inquiry they were not trying to “clean‘’ the money.

The inquiry became aware of a large registered club with between 150 to 250 electronic gaming machines which was frequented by members of a notorious bikie gang. Picture: Sixty Minutes

A NSW Police operation into drug supply in a regional area estimated an individual known as CS02 and his associates put through $15.5m in one year in regional licensed premises just before Covid hit.

The inquiry‘s concluded CS02 was a problem gambler who mainly used the proceeds of crime to gamble and occasionally deposited cheques from his winnings in the bank.

He said he “‘was never trying to launder money’’ but admitted he said they would take photos of winning ticket payouts to show to police if they were pulled over to explain why they had large amounts of cash.

In another example the inquiry became aware of a large registered club with between 150 to 250 electronic gaming machines which was frequented by members of a notorious bikie gang.

The inquiry said NSW police intelligence showed there was a relationship between a senior member of the bikie group and management at the venue. It was established management knew the patron was a member of an outlaw motorcycle gang and spent large sums of money at the premises.

One individual known as CS02 and his associates put through $15.5m in one year.

Despite knowing his background and his large spending pattern the venue did not advise Austrac about his behaviour or of the bikie associates which was estimated to put through millions of dollars at the venue.

The 86-page report using data from AUSTRAC, the Australian Crime Intelligence Commission and the independent Liquor and Gaming Authority NSW also found data collection from poker machines was unable to flag potential money laundering operations with most of the 8 recommendations surrounding improved data collection from machines.

The report contains case studies of real-life examples of how allowing cash to continue to be used in electronic gaming machines makes it easy for criminals to gamble with dirty money.

It also identified an apparent lack of awareness by club boards, hoteliers and their staff of their anti-money laundering responsibilities which it recommended also needs to be addressed with improved legislation and regulations.