The recently launched litigation by AUSTRAC, against Mount Pritchard District and Community Club (Mounties), a major electronic gaming machine (EGM) provider, has caught the attention of the gaming and wagering industry.

With its move into pubs and clubs we expect the regulator will apply a playbook that draws upon AUSTRAC’s history with large banks, casinos and bookmakers that targets sectors it considers high-risk with an underinvestment in money laundering and terrorism financing (ML/TF) risk management and Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) compliance. AUSTRAC will focus on headline operators and the systemic risks inherent in cash-heavy venues, with clubs now facing deeper, more sustained scrutiny. Passive reliance on third parties will not be sufficient and tailored, actively managed AML/CTF risk frameworks are now essential.

This article delves into AUSTRAC’s emerging enforcement themes, pinpoints key risks prevalent in this industry, and outlines the immediate priorities that clubs and EGM operators should address.

What happened? Key observations by AUSTRAC

In July 2025, AUSTRAC initiated civil penalty proceedings in the Federal Court against Mounties, one of NSW’s largest and most profitable club groups. As AUSTRAC CEO David Thomas warned, “This is a big company with an even bigger responsibility to ensure its clubs are managing the risks that criminals can run dirty money through its gaming machines”. The regulator alleges Mounties failed to take meaningful action against ten high-risk customers who collectively wagered $140 million through poker machines, effectively operating without a compliant AML/CTF Program and leaving itself wide open to criminal exploitation. AUSTRAC made the following key observations:

• Customer monitoring is critical: Weak transaction monitoring and enhanced customer due-diligence processes and systems. Mounties failed to identify and investigate high-risk activity linked to $140M in EGM turnover, which left them unable to demonstrate how they were monitoring customers.
• AML/CTF Programs not fit-for-purpose and must go beyond checklists: The AML/CTF Program lacked tailored risk assessments, sector-specific controls, and operational relevance. As a result, monitoring systems did not reflect actual ML/TF risks or customer risk profiles.
• Over-reliance on third-party providers without sufficient oversight: A reliance on vendors without active oversight led to missed red flags, which reinforces AUSTRAC’s view that clubs must take more ownership of AML/CTF obligations. The club’s reliance on outsourced compliance activities, and lack of internal oversight of those activities, left it vulnerable to criminal exploitation.
• Training is a governance issue: Boards and executives often failed to complete AML/CTF training, weakening leadership accountability. In addition, there was limited staff training around suspicious and unusual activity associated with money-laundering.
• Poor quality independent review of its AML/CTF program: Independent Reviews were desktop in nature and did not evidence any form of ample testing of compliance. As a result, the reviews did not satisfy the purpose of a review as required under Rule 8.6.5 of the AML/CTF Rules.
• Decisions need documented rationale: Key AML/CTF decisions relating to enhanced customer due diligence were not supported by clear, auditable reasoning.

Key risks identified by AUSTRAC

AUSTRAC’s investigation into Mounties, “one of the largest and most profitable club groups in NSW, owning 10 venues (8 of which operate around 1,400 poker machines) and generating hundreds of millions in poker machine revenue,” as Mr Thomas observed, uncovered a troubling pattern of behaviour and operational gaps that left the club exposed to significant ML/TF risks, including:

• Bill stuffing: Customers inserting cash into EGMs to obtain credit, redeemable by cheque, with little or no gameplay.
• Minimal play with large cash inserts: Large amounts of cash inserted into EGMs or multi-terminal gaming machines with minimal play before cashing out.
• Voucher transferability: Customers buying winning vouchers from others and redeeming them.
• Third-party transactions: Customers claiming winnings of others or betting on behalf of third parties.
• Avoidance of monitoring: Use of multiple cashiers or terminals to avoid staff observation.
• Collusion: Customers gaining trust or colluding with staff to avoid detection or ID requirements.
• Receipt of illicit funds: Risk of receiving money from unknown sources, proceeds of crime, fraud, or other legal contraventions.

Immediate priorities for boards, executives and compliance teams

The Mounties Statement of Claim should be seen as a strategic pivot, marking a turning point for the clubs and hospitality sector. It signals heightened scrutiny of serious financial, reputational, and regulatory risks. For boards, executives and compliance teams, this case is a call to uplift governance, review and strengthen risk controls and ensure operational accountability.

As AUSTRAC sharpens its focus on cash-intensive gaming venues, clubs and EGM operators should act now or risk enforcement action. The regulator’s recent cases make clear that passive compliance and legacy or cookie-cutter AML/CTF Programs are not enough. Proactive risk-based controls, aligned to the latest AML/CTF reforms, are a must. This urgency is amplified by the pending Tranche 2 reforms, which will expand AML/CTF obligations to new sectors, and the broader modernisation of the AML/CTF Act, which aims to streamline compliance and strengthen enforcement levers. These reforms will reshape how designated services are defined, strengthen requirements for customer due diligence, raise the standard of evidence required for governance, and formalise how Independent Reviews are adopted and executed across a business.

In this context, there are five immediate priorities every club and EGM operator should consider to close control gaps, uplift governance, and demonstrate the defensible framework AUSTRAC now demands.

1. Conduct a comprehensive and thorough independent review

• Engage an independent external AML/CTF specialist to undertake an assessment of your AML/CTF Program in line with legislative requirements and AUSTRAC expectations. This review must include sample testing of key AML/CTF program controls, and reporting should go to senior management and the board.
• Understand any critical governance, control, and reporting gaps that emerge from the review.
• Agree and act on any recommendations to improve AML//CTF compliance, commit to the necessary funding and monitor to implementation of the uplift.

2. Undertake a robust ML/TF and proliferation financing (PF) risk assessment

• Utilise a data driven approach to assess ML/TF/PF risks across your customer segments, products, channels and jurisdictions.
• Build a clear, repeatable methodology and apply it to each business unit's unique profile, ensuring tailoring to your business' nature, size and complexity.
• Focus on AUSTRAC identified typologies, threats and embed a risk-based approach into the assessment and governance framework, explicitly incorporating ML/TF/PF, for full regulatory alignment.
• Confirm the risk assessment satisfies the latest AML/CTF reform requirements and updated standards, rules and guidance, explicitly incorporating PF.

3. Uplift our AML/CTF Program

• Align your Program and its underpinning framework with the risks flagged in your ML/TF risk assessment.
• Incorporate uplift recommendations and best-practice insights from your Independent Review.
• Tighten customer due diligence, transaction monitoring and escalation protocols for comprehensive reporting.
• Embed, where required, the enhancements mandated by the most recent AML/CTF reforms.

4. Review and test your third-party reliance

• Review governance and oversight for all outsourced AML/CTF functions (onboarding, screening, monitoring).
• Conduct oversight (include sample testing) of activities undertaken by third parties to identify control gaps or compliance failures.
• Review contractual and process controls to keep accountability for every outsourced activity.

5. Undertake comprehensive training

• Launch comprehensive, organisation-wide training, starting with the board and senior management.
• Deliver ongoing, role-specific sessions for frontline teams, managers and compliance staff.
• Leverage real-world AUSTRAC guidance and enforcement examples to highlight sector trends and red flags.
• Establish a non-compliance framework that keeps awareness high and embeds best practices.

Looking Ahead: Transforming AML/CTF compliance into a strategic asset

The AML/CTF framework has evolved through successive reforms to counter emerging money-laundering and terrorism-financing threats. In this intensified environment, ML/TF risk management can no longer be a static formality. Organisations that embed dynamic, risk-based controls, leverage real-time analytics, and foster a culture of accountability will not only satisfy AUSTRAC’s expectations but also gain a strategic edge. Here are some questions to help sharpen your focus:

• How prepared is your organisation to navigate these new requirements?
• Have you recalibrated your ML/TF risk assessment to reflect the latest reforms?
• Are your customer due diligence and transaction monitoring protocols agile enough to catch evolving ML/TF typologies?
• Do your governance structures ensure clear, documented decision making and continuous oversight?

By treating compliance as a living process, grounded in tailored risk assessments, robust training, independent assurance, and proactive governance, clubs and EGM operators can transform regulatory obligations into a source of operational resilience and reputational strength.