Organised crime thrives because NSW cannot follow the money

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Organised crime thrives because NSW cannot follow the money

Before recent inquiries into The Star and Crown casinos, few people would have suspected that money laundering was a huge problem in Australia.

Senior executives at those companies confidently asserted our capable law enforcement officials were on the case and money laundering was something that only happened in shadowy overseas jurisdictions such as Switzerland or the British Virgin Islands.

Logically, it should be easy to launder money through the 96,000 poker machines at the state’s 4000 clubs and hotels. Illustration Jo Gay

Logically, it should be easy to launder money through the 96,000 poker machines at the state’s 4000 clubs and hotels. Illustration Jo GayCredit:

Yet the inquiries have shown that organised criminals, including Chinese triads, were likely using gaming tables at The Star and Crown as their back offices, laundering their drug money and taking out legal cash.

Those revelations were shocking but they are not isolated examples. Australia is generally performing poorly in cracking down on the illegal transactions on which organised crime depends.

As the Herald’s Nick McKenzie reported on Friday, NSW Assistant Police Commissioner Stuart Smith in a secret briefing last December said Australia and NSW are losing the fight against organised crime. He said police were fighting with “pool noodles” while criminals were armed with guns.

While the attack that wounded Comancheros sergeant-at-arms Tarek Zahed and killed his brother in an Auburn gym this week grabbed headlines, the key to stopping organised crime, in real life just like on television, is to follow the money.

This is where Smith expressed most concern, criticising AUSTRAC, the federal agency in charge of chasing financial crime. Calling them “nitwits,” he said they were too focused on money laundering in the banking system and ignoring other forms of crime.

It is hard to know whether he is right to blame AUSTRAC for being too focused on banks. The agency can point to several significant prosecutions launched against NDIS fraud and an international MDMA drug syndicate investigation.

Smith’s briefing is a worrying sign of friction between AUSTRAC and NSW police when they should be working hand in glove. It suggests there is a need for better co-ordination between state and federal agencies, including NSW police, the Australian Federal Police, the Australian Tax Office, AUSTRAC and the National Crime Commission.


Yet the issue is much wider than the failings of regulators. Many of the problems are rooted in corrupt behaviour.


Logically, it should be just as easy to launder money through the 96,000 poker machines at the state’s 4000 clubs and hotels as at The Star and Crown casinos. The industry has gross winnings of about $8 billion a year.

Yet when former digital minister Victor Dominello recently tried to introduce a cashless gaming card to track the identities of people who use gaming machines and in the process control problem gambling, Clubs NSW and the Australian Hotels Association used their formidable lobbying power to kill the idea and move him aside.

At a federal level, the Morrison government has dragged the chain on passing basic protections against money laundering, which have been recommended since 2007 by the Paris-based Organisation for Economic Co-operation and Development.

The government passed the first stage of the rules requiring banks to establish the identity of their clients and report any suspicious transactions but, even though most comparable countries have already complied, Australia has found excuse after excuse not to enact the second stage extending the same obligations to the real estate agents, accountants and lawyers who advise organised criminals on how to hide their cash.

A parliamentary inquiry into the adequacy of Australia’s monetary laundering regime in March endorsed the second stage but voiced concern about the effect on small business and the legislation still seems years away.

Equally, the inquiry endorsed a so-called public beneficial ownership register, such as exists in many countries, which lists the ultimate owners of the trusts and complex corporate structures behind which money launderers hide their assets.

The OECD’s Financial Action Task force said: “Australia’s measures to ensure the availability of accurate and up-to-date information on the beneficial owners of companies and trusts in a timely manner needed improvement.”

The difficulty NSW has faced in recovering the tens of millions of dollars former ALP minister Eddie Obeid pocketed from his corruption shows another hole in our laws.

The NSW Crime Commission has struggled to untangle the web of family trusts and companies through which Obeid laundered his income, raising questions about the reach of the NSW Criminal Assets Recovery Act.

The task of fighting organised crime is enormous but one way of lightening the load would be establishing a federal integrity commission, with broad investigative powers similar to those of NSW’s Independent Commission Against Corruption.

It could take over the responsibility for integrity cases involving politicians and bureaucrats, leaving the Australian Federal Police more time to focus on international crime rings.

Law enforcement officials must be given the tools and the time they need to focus on catching Mr Bigs rather than the little fish.

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