Why Hotels, Pubs and Clubs are exposed to financial crime risk
Hotels, Pubs and Clubs sit at the centre of local economies handling high volumes of cash, card and digital payments, whilst serving a diverse and often transient customer base engaged in gambling via Electronic Gaming Machines (EGMs). These same characteristics, however, also expose hospitality venues, including hotels, pubs and clubs to elevated money laundering, terrorism and proliferation financing risk.
Organised criminal networks exploit hotels, pubs and clubs by cycling illicit cash through electronic gaming machines to structure deposits, disguise source of funds, generate “legitimate” winnings and integrate criminal proceeds into the financial system under the appearance of normal gaming activity.
For MLROs, compliance managers and senior operators in hospitality, Arctic Intelligence provides a purpose-built ML/TF/PF Risk and Control Assessment solution for Hotels, Pubs and Clubs, supporting regulated businesses in meeting regulatory expectations, enhancing risk visibility and transforming compliance from a burden into a competitive advantage.
Why Hotels, Pubs and Clubs are targeted by organised criminal networks
Hotels, Pubs and Clubs that operate electronic gaming machines are inherently exposed to financial crime risk for several reasons:
- Cash-Intensive Gaming Environments: EGMs allow large volumes of cash to be inserted, wagered and withdrawn with minimal friction, creating ideal conditions for criminals to layer illicit funds through repeated low-stake play and convert them into “legitimate” winnings.
- Ticket-In / Ticket-Out and Voucher Systems: Gaming tickets and vouchers provide portable, bearer-style instruments that can be transferred between individuals, structured across venues and redeemed later – enabling anonymous movement and integration of illicit funds.
- Low-Visibility Player Identification: Unlike banking environments, many venues have limited real-time customer identification for EGM play, allowing repeated anonymous or pseudonymous use of electronic gaming machines to mask ownership and source of funds.
- High-Frequency, Low-Value Transaction Structuring: Criminal networks exploit rapid low-value wagers across multiple machines, venues and staff shifts to avoid detection thresholds while progressively laundering large sums.
- Venue Hopping and Syndicated Play: Groups coordinate play across multiple hotels, pubs and clubs to distribute laundering activity, fragment transaction trails and reduce venue-level visibility.
- Use of Cash Recycling and ATM Loops: Illicit cash can be withdrawn, recycled through EGMs, and redeposited as “gaming winnings,” providing a perceived legitimate audit trail.
These characteristics collectively elevate the risk profile of Hotels, Pubs and Clubs and necessitate a robust, sector-specific risk assessment framework that goes beyond generic AML/CTF frameworks.
Introducing Arctic Intelligence’s ML/TF/PF Risk and Control Module for Hotels, Pubs and Clubs
Arctic Intelligence’s Hotels, Pubs and Clubs Risk and Control Module provides a comprehensive and configurable foundation for conducting robust ML/TF/PF risk assessments tailored to this sector. This module helps you:
- Identify and Prioritise ML/TF/PF Risks: Using hospitality-specific risk taxonomies, the module guides venues through identifying the highest-impact risk areas including electronic gaming machine activity, cash handling practices, voucher and ticket-in/ticket-out systems, event and group bookings, high-risk customer segments, loyalty and membership programs, and geographic exposure.
- Assess Controls and Operational Effectiveness: Moving beyond static venue checklists, the solution maps venue controls to real gaming and cash risk drivers and enables testing of both design and operational effectiveness allowing operators to demonstrate, with evidence, that gaming floor, POS and cash management controls are functioning as intended.
- Calculate Residual Risk Transparently: Residual risk reflects a venue’s true exposure. Arctic’s module aggregates gaming, cash and transactional risk indicators with control performance to produce defensible residual risk ratings that are directly aligned to risk appetite, escalation thresholds and governance oversight.
- Produce Audit-Ready Documentation: Built-in audit trails, version history and structured reporting provide regulators and licensing authorities with transparent, evidence-based documentation explaining how gaming-related risk conclusions were reached and governed.
This solution embeds sector knowledge, regulatory best practices and global risk methodologies into a configurable, scalable risk and control platform.
The built-in audit trail, review logs and Board-ready reporting support stronger oversight and governance while making risk outcomes digestible for executives and boards.
Who does this module apply to?
The money laundering, terrorism and proliferation financing risk and control module contains a library of risks, controls and control tests designed specifically for different types of Hotels, Pubs and Clubs that offer Electronic Gaming Machines:
| Accommodation with Gaming | Corporate Hospitality Groups |
| Bars and Lounges | Nightclub Venues |
| Boutique Hotels | Public Houses and Pub Chains |
| Casino Linked Resorts | Casino Integrated Resorts |
| Entertainment Venues | Regional Licensed Venues |
| Hotel Chains | Community and Social Clubs |
| Sporting Clubs | Resorts and Lodges |
| Licensed Venues with Gaming Rooms | RSL Clubs |
What does this module contain?
Enterprise-wide ML/TF/PF risk assessment, covering the following risk groups:
- Environmental Risk – covering exposure to internal and external risk indicators.
- Customer Risk – covering customer base profile, customer location risk, legal form risk, industry / occupation risk, PEP risk and customer activity risk.
- Industry Red Flag Risk – covering ML/TF/PF red flags associated with Hotels, Pubs and Clubs.
- Product and Services Risk – covering the services provided by Hotels, Pubs and Clubs that are subject to AML/CTF laws and the inherent risk characteristics of each of these.
- Channel Risk – covering face-to-face and non-face-to-face customer onboarding and transaction channels.
- Transaction Risk – covering higher risk transaction types.
- Country Risk – covering higher risk country risk exposures based on the residency, nationality or citizenship (Individuals) and country of registration, incorporation, domicile or operations (Entities).
Firms can deploy the content module out-of-the-box or tailor it to their methodology, eliminating the need to start from scratch while maintaining full ownership of their risk model.
The module also includes a comprehensive library of suggested sector controls and control tests to support design and operational effectiveness testing.
It also allows firms to import their own risk indicators and controls or enhance the expert-built libraries to suit their bespoke risk methodology and regulatory environment.
Companies we’ve helped
Here are some of the companies we’ve helped in this sector:
| Parramatta Leagues Club | Redcape Hotel Group | Wests Group | ||
| Smithfield RSL | Inverell Sporties | Dubbo RSL Memorial Club |
Get started with Arctic Intelligence
Whether you are establishing your first enterprise-wide ML/TF/PF risk assessment or upgrading a legacy spreadsheet-based program, Arctic Intelligence’s Hotels, Pubs and Clubs Risk and Control Module is a scalable, defendable and configurable solution that meets the needs of modern compliance teams.
Book a demo or contact us to explore how our platform can help your business strengthen compliance, mitigate financial crime risk and build a risk program that stands up to regulatory scrutiny. Or visit our website to learn more.
