The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime is built on one fundamental principle: organisations must understand their own risks before they can effectively manage them.

For registered clubs that operate gaming machines, conducting an AML/CTF Risk Assessment is not merely a compliance exercise. It forms the foundation of the club’s entire AML/CTF Program and demonstrates to the Board, senior management, regulators, and law enforcement agencies that the organisation understands where it may be vulnerable to financial crime.

With the significant reforms introduced under Australia’s AML/CTF legislation, regulators expect reporting entities to adopt a genuine risk-based approach rather than relying on generic policies or templates. AUSTRAC also provides guidance on identifying and assessing money laundering, terrorism financing, and proliferation financing risks as part of developing an effective AML/CTF Program. Learn more in AUSTRAC’s guidance on Step 2: Identify and Assess Your Risks: https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/develop-your-amlctf-programs/step-2-identify-and-assess-your-risks.

The AML/CTF Risk Assessment Is the Foundation of Your AML/CTF Program

An AML/CTF Program should never be written first.

Instead, the program should be developed from the findings of the club’s AML/CTF Risk Assessment.

Without understanding the risks facing the organisation, it is impossible to determine:

• What controls are required.
• Which customers require enhanced due diligence.
• What transactions require closer monitoring.
• How often customers should be reviewed.
• Where staff training should focus.
• What resources are required.
• What information should be reported to the Board.

An AML/CTF Risk Assessment provides the roadmap that guides every other component of the AML/CTF Program.

Every Club Is Different 

One of the biggest mistakes organisations make is assuming that every registered club has the same risk profile.

No two clubs are identical.

Each club has different:

• Customer demographics.
• Gaming operations.
• Cash turnover.
• Geographic location.
• Membership profile.
• Community activities.
• Size and financial resources.
• Technology.
• Staffing arrangements.

These differences mean each club has its own unique exposure to money laundering, terrorism financing, and proliferation financing risks.

An AML/CTF Risk Assessment should always reflect the club’s actual operations rather than relying on a generic template.

Understanding Your Risk Environment 

An effective AML/CTF Risk Assessment considers a wide range of factors, including:

Customer Risks 

Understanding who uses your club is critical.

Questions may include:

• Are most patrons local members?
• Do large numbers of visitors attend?
• Are high-value gaming customers identified?
• Are there politically exposed persons (PEPs)?
• Are customers purchasing gaming credits for third parties?
• Are source of funds or source of wealth enquiries likely to be required?

Understanding customer behaviour allows clubs to apply appropriate customer due diligence measures.

Products and Services 

Different services present different levels of risk.

A registered club may provide:

• Gaming machines.
• Cash payouts.
• Keno or wagering facilities.
• Functions.
• Accommodation.
• ATM facilities.
• Promotions and jackpots.

Each designated service should be assessed to determine how it could potentially be exploited for money laundering.

Delivery Channel Risks 

How customers interact with the club also affects risk. 

Consider: 

• Face-to-face interactions. 
• Membership processes. 
• Cash transactions. 
• Electronic transfers. 
• Third-party involvement. 
• Digital systems. 

Each delivery method presents different opportunities for criminal exploitation. 

Geographic Risks 

Location matters.

The club should consider:

• Crime levels in the local area.
• Nearby transport hubs.
• Tourist activity.
• Border regions.
• Cash-intensive industries.
• Known organised crime activity.
• Customers from higher-risk jurisdictions.

Geographic factors often influence customer behaviour and transaction patterns.

Transaction Risks 

Clubs should understand how money moves through their business. 

Examples include: 

• Large cash transactions. 
• Multiple gaming machine payouts. 
• Structuring. 
• Minimal gaming with significant cash redemption. 
• Rapid cash movement. 
• Third-party transactions. 
• Unusual customer behaviour. 

Understanding these risks helps develop an effective transaction monitoring program. 

Employee Risks 

Employees are one of the most important controls within an AML/CTF Program. 

The assessment should consider: 

• Staff experience. 
• Training levels. 
• Access to cash. 
• Supervisory arrangements. 
• Segregation of duties. 
• Personnel due diligence. 
• Contractor risks. 

Well-trained staff are often the first line of defence against financial crime. 

The Risk Assessment Drives Your Controls 

One of the most common compliance mistakes is treating the AML/CTF Risk Assessment as something completed once and then shelved.

Money laundering risks continually evolve.

Clubs should review their assessment whenever there are significant changes, including:

• Changes to legislation.
• New designated services.
• Major renovations.
• New technology.
• Changes to customer behaviour.
• Significant incidents.
• Regulatory guidance from AUSTRAC.
• Results of independent reviews.

Regular review ensures the AML/CTF Program remains effective.

Risk Assessments Are Not Static Documents 

One of the most common compliance mistakes is treating the risk assessment as something completed once and then shelved. 

Money laundering risks continually evolve. 

Clubs should review their assessment whenever there are significant changes, including: 

• Changes to legislation. 
• New designated services. 
• Major renovations. 
• New technology. 
• Changes to customer behaviour. 
• Significant incidents. 
• Regulatory guidance from AUSTRAC. 
• Results of independent reviews. 

Regular review ensures the AML/CTF Program remains effective. 

The Board Has an Important Role 

Boards cannot effectively approve an AML/CTF Program unless they understand the risks it is designed to manage. 

The risk assessment should provide directors with clear information about: 

• The club’s highest risks. 
• Existing controls. 
• Residual risks. 
• Areas requiring additional resources. 
• Emerging threats. 
• Trends identified through transaction monitoring. 
• Significant compliance issues. 

An informed Board is better positioned to meet its governance responsibilities and demonstrate effective oversight. 

More Than Compliance 

A well-developed AML/CTF Risk Assessment delivers benefits well beyond regulatory compliance. 

It helps clubs: 

• Better protect their reputation. 
• Reduce financial crime risk. 
• Improve customer oversight. 
• Strengthen governance. 
• Support frontline staff. 
• Improve decision-making. 
• Allocate compliance resources more effectively. 
• Demonstrate a strong compliance culture. 

Ultimately, a thorough risk assessment enables clubs to focus their efforts where they are needed most. 

Final Thoughts 

An AML/CTF Risk Assessment is far more than a legislative requirement. It is the foundation upon which an effective AML/CTF Program is built.

Without understanding its risks, a registered club cannot confidently determine what controls are appropriate, where resources should be directed, or whether its compliance framework is truly effective.

For Boards, senior management, and Compliance Officers, investing time in developing a comprehensive, club-specific AML/CTF Risk Assessment is one of the most important steps in protecting both the organisation and the Australian financial system from money laundering, terrorism financing, and other forms of serious financial crime.

If your club would like assistance developing or reviewing its AML/CTF Risk Assessment or broader AML/CTF Program, contact the team at CHD Partners through our Contact Us page.