The Australian Criminal Intelligence Commission (ACIC) is currently conducting a Special Investigation known as the Targeting Criminal Wealth No.2 (TCW2) Special Investigation which aims to disrupt and deter criminal groups by collecting evidence and intelligence about financially motivated crime.
Investigations conducted with our law enforcement and intelligence partners have provided insights into vulnerabilities into junket operations within casinos located in Australia. ACIC and its law enforcement, intelligence and regulatory partners are aware and actively addressing the significant risks of money laundering through casinos, particularly through casino junkets. The ACIC and its partners are committed to tackling serious financial crime in Australia and we work through a number of joint initiatives that bring together government, private sector and regulatory stakeholders to target the key financial crime threats to Australia.
ACIC investigations conducted under the TCW2 Special Investigation have provided insights into vulnerabilities in junket operations within casinos located in Australia. It is assessed that the lack of transparency of casino junket operations, anonymity of participants and obscurity around beneficial ownership, source and distribution of junket funds provide opportunities for criminal exploitation. These vulnerabilities are demonstrated through the use of junkets to circumvent capital flight restrictions, the relationship between the casino and the junket operator and links to serious and organised crime.
Capital flight restrictions
Restrictions on capital outflows can be imposed for a number of reasons including the prevention of capital flight or to limit currency devaluation. In relation to capital flight, for example, international funds transfers may only be allowed for non-investment purposes and customers may be required to indicate both when and how they intend to use a foreign currency. While the intent is to stabilise the currency market, it can impact on high wealth individuals seeking to transfer funds internationally for the purpose of gambling. In an effort to evade these types of controls, underground banking systems have been established to facilitate the movement of funds.
Due to the financial arrangements in place that allow casinos to reconcile funds on a global scale, junkets essentially function as an informal value transfer system. This offsetting method is used legitimately to reconcile junket funds on and offshore but is also likely used to circumvent capital flight restrictions and to facilitate the concealment of criminal wealth.
Junket operator as the casino customer
The structure of junket operations enables opaqueness around the source of beneficial ownership of funds presented as buy-ins and represents a significant money laundering risk. In the junket environment, the difficulty in verifying beneficial ownership of junket funds is due primarily to the junket operator being the customer of the casino rather than the participants, in addition to the majority of junket operators and participants being non-Australian residents. As such all junket funds are attributed to the junket operator despite the money being sourced from multiple participants.
The requirements to conduct Know Your Customer (KYC) on junket participants are more limited than the junket tour operator by virtue of the services the casino provides to each. This arrangement results in cash or other funds being moved though the junket where neither the source of funds, the owner of the funds, nor the identity of the individual conducting the betting transaction or cash deposit into a junket account is known.
Access to overseas probity information for junket operators and participants is limited. This consequently presents a significant criminal vulnerability as the extent of background assessments is predominately restricted to open source and financial checks.
Serious and organised crime associations
The infrastructure supporting junket operations both internationally and within Australia provides opportunities for exploitation by serious and organised crime to conceal and legitimise criminal wealth. This is supported by open source reporting and general law enforcement assessments of the criminal vulnerabilities associated with junket operations.
Tackling financial crime collaboratively
The ACIC’s intelligence role includes discovering, understanding and responding to the threat presented by highest levels of organised crime and collaborating with our law enforcement partners to stop criminals exploiting emerging opportunities and perceived gaps in law enforcement information.
Given the international scale and cross-jurisdictional nature of the criminality under investigation, the ACIC will continue to work in cooperation with both international and domestic law enforcement and regulatory agencies. It would not be appropriate to comment further on these activities at this time.
Michael Phelan APM
Chief Executive Officer
Australian Criminal Intelligence Commission
- Note: The Targeting Criminal Wealth Special Investigation is not a new investigation, but an existing one.