Money laundering, junket tour operators and financial services

AUSTRAC has published its money laundering and terrorism financing (ML/TF) risk assessment of the junket tour operations (JTOs) sector.  USTRAC has assessed that the JTO sector faces multiple criminal threats and the overall ML/TF risk is high.

The assessment provides insight and understanding to financial institutions and remittance providers which provide financial services to casinos, JTOs or junket participants.

The report discusses cuckoo smurfing, a money laundering process in which non-complicit beneficiary customers of international remittances have proceeds of crime deposited in their bank accounts, in consideration for the legitimate funds sent to them from offshore.

For the purpose of this report, a junket is an arrangement between a casino and a junket tour operator to facilitate a period of gambling by one, or a group, of high wealth player(s) at the casino.

Some junket tour operators have been identified as having been associated with a range of illicit activities including instances of tax evasion, visa misuse, links to sanctioned entities and possible corruption.

The assessment concludes that the main criminal threat facing the JTOs sector is money laundering. The assessment also found that patronage by high risk customers from foreign jurisdictions is a key vulnerability associated with junkets.

Activity Of JTOs On Bank Accounts
The assessment identified SMRs lodged by banks in relation to JTOs and junket tour representative (JTRs) that describe extensive gambling-related transactions.

These SMRs indicate a number of JTOs/JTRs have Australian bank accounts on which they transact outside of the casino environment, including for additional gambling-related activities. In itself, this may not be unusual or suspicious, however given the account and remittance facilities offered by casinos, extensive gambling transactions on personal bank accounts can indicate efforts to layer or further obfuscate financial activity.

Such activity can also indicate attempts to disguise the origins of funds by spreading activity across several reporting entities.

Accounts are also used to send international funds transfers and purchase high-value assets such as real estate and luxury vehicles.

In addition to making cash deposits directly into the JTO account at the casino, cash for junkets can be deposited into casinos’ bank accounts.

JTOs’ casino accounts are being used to facilitate the storage and movement of significant amounts of money, both domestically and internationally.

On a per-transaction and per-customer basis, the junket tour operations sector is also significantly exposed to the risks associated with high-value cash activity. The destination of large cash withdrawals from JTO accounts remains a key intelligence gap.

AUSTRAC’s assessment of junket tour operations assessed financial data and intelligence for the period from April 2018 to March 2019, a period when junket tours were highly active. Due to international border closures there has been a significant reduction in JTO activity in Australian casinos in 2020.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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