Customer Risk Assessment for Pubs and Clubs: Things to Consider
Pub and club owners must assess the risk of money laundering and terrorism financing across their venues. This article outlines how to assess customer risk, spot red flags like structuring or TITO walking, and implement an AML framework that protects your business from serious threats and regulatory breaches.
Louise Lane
3 April 2025
3 min read
As a pub or club owner in Australia, it is important to assess the potential risk of money laundering or terrorism financing (ML/TF) through your venue. This guide is designed to help the industry consider relevant risk factors and tailor responses to their specific circumstances.
How to Approach Assessing Customer Risk
Consider Your Customer Base as a Whole
Understand what your average customer looks like and the risk they pose. This forms the foundation of a risk-based approach.
Update Your AML Framework
Ensure your documents identify higher-risk profiles and have controls to:
- Flag issues to the right people.
- Manage or mitigate risks effectively.
Act on High-Risk Cases Quickly
When higher ML/TF risk is observed, act swiftly to understand and assess the customer.
Set Clear Risk Tolerances
Work with your Board and senior management to define the business’s risk appetite and when to cut ties with high-risk customers.
Remember: A high ML/TF risk profile may be linked to serious crimes like murder, drug/human trafficking, or terrorism funding.
Factors to Consider When Assessing Your Broader Customer Base
Most pubs and clubs may find their customers present low risk due to:
- Predominantly individual (not corporate) patrons.
- Pre-existing state identification laws (e.g., clubs).
- Regulated gaming services.
- Built-in machine controls and load limits.
- Restrictions on how winnings can be paid.
Each venue must assess these factors in the context of their own operations.
Spotting Individual Risk
Even if your customer base is generally low-risk, individual assessments are vital. Licensed venues can attract high-risk individuals, so your AML framework must:
- Encourage internal reporting of suspicious or unusual behaviour.
- Include transaction monitoring systems to detect anomalies.
Red Flag Behaviours to Watch For:
- Inconsistent behaviour: Changes in betting or spending habits.
- Source of funds concerns: Use of third-party money or inability to verify origins.
- Structuring: Splitting transactions to avoid reporting.
- Bill stuffing: Inserting cash and cashing out without meaningful play.
- Smurfing: Using multiple people to break down large amounts.
- TITO walking: Using gaming tickets as currency elsewhere.
- Colouring up: Converting small notes to large denominations.
- Parking funds: Storing money in cashless systems.
- Even money betting: Low-risk bets designed to move money.
- Buying TITOs: Buying winning tickets at a markup.
- Third-party transfers: Attempts to move value between people.
- Adverse media: Criminal links reported in the media.
Your venue should be equipped to respond swiftly to these behaviours.
Resources Available
A customisable customer risk assessment template is available for download.
AUSTRAC enforcement shows that limited resources are not a valid excuse. AML/CTF compliance must be a priority.
Evaluating Your Risk Management Approach
Best practices include:
- Creating formal customer risk assessment methodologies.
- Implementing tailored monitoring systems.
- Testing and validating internal controls regularly.
- Seeking independent AML/CTF program reviews.
- Ensuring senior management accountability.
Conclusion
Effective AML/CTF compliance is about more than avoiding penalties—it's about protecting your venue’s reputation and supporting national financial integrity. The time to act is now.
Contact us today for a no-obligation consultation.