Macquarie Group-backed ATM provider begins removing machines from suspected illegal tobacco stores
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Next Payments technicians have removed ATMs from suspected illegal tobacco shops. (ABC News: Liam Walsh)
One of Australia's largest private ATM suppliers, Macquarie Group-backed Next Payments, is removing more than 40 of its machines from suspected illegal tobacco stores.
Next Payments chief executive Tim Wildash announced the move after an ABC investigation found ATM companies were cutting deals with tobacco criminals and installing their machines in high-turnover illegal cigarette shops.
Mr Wildash said he had not been aware of the extent of the issue until the ABC's reporting, and he was insisting the company remove ATMs from the outlets.
"If they [the shops] are not legal, we're not going to provide services,'' Mr Wildash told the ABC.
"[The] ABC highlighted the size and rapid spread of this issue."
Macquarie Group-backed Next Payments, is removing more than 40 of its machines. (ABC News: Liam Walsh)
The ABC found in some cases Next Payments had deals with criminals or associated businesses to host its machines, even after the men had been caught by police for breaches of tobacco offences or for handling of proceeds of crime offences.
The removal of the Next Payments machines came as financial payment processing company EFTEX took action to slash ties with private ATMs in illegal tobacco shops in response to the ABC's revelations.
EFTEX, which provides transaction services for over 5,000 ATMs, last week told clients it would stop payment processing for machines located in tobacco outlets and other high-risk environments because of the increased regulatory focus generated by the media reports.
The illicit tobacco trade has ballooned amid increasing government taxes on tobacco — packs of 20 illegal cigarettes can sell for as little as $8 while Commonwealth duties alone should cost almost $28.
The ABC found ATMs were fuelling the at-times violent trade because illegal tobacco outlets would often push customers to pay in cash for the contraband cigarettes, directing people to use in-store ATMs if they did not have money to hand.
The cash transactions made it difficult for authorities like the Australian Tax Office and law enforcement agencies to track the illegal trades and subsequent massive profits.
The Australian Criminal Intelligence Commission told the ABC: "The scale of cash turnover through private ATMs in certain industries make these an ideal target for serious and organised crime groups who thrive off the money made from criminal activities."
In some cases, private ATM providers and the individual or business hosting the machines receive a commission on every withdrawal — and machines at tobacco stores linked to criminals are recording up to three times the normal transaction rates of standard bank ATMs.
Some illicit tobacco shops were doing so many transactions they hosted two machines on site, the ABC found.
The removal of the Next Payments machines came as financial payment processing company EFTEX took action to slash ties with private ATMs in illegal tobacco shops. (ABC News: Liam Walsh)
The ATMs also provide opportunities for money laundering when merchants have deals to load their own cash into the machines, experts say. Private ATMs are not captured under anti-money laundering laws.
Proceeds of crime cash could be loaded into the machines and when an innocent customer withdrew this money, that customer’s bank would then ultimately credit the merchant’s account with the same amount.
The money's original source does not come under the same level of scrutiny that occurs if criminals try depositing certain amounts of cash in various ways at a bank counter.
In one case uncovered by the ABC, a convicted cannabis kingpin operated his own fleet of ATMs sourced from Queensland-based business atm2go and sought to load drug money into the ATMs.
Atm2go, which has multiple machines installed in illicit tobacco shops, has declined to comment.
Melbourne-based Next Payments' biggest shareholder, with a 47 per cent stake, is Macquarie Group.
Mr Wildash has maintained that tobacco is only 1 per cent of business for his organisation and that his company has been cooperating with authorities.
Tim Wildash says if shops are not legal, Next Payments will not provide its services. (Supplied)
He rejected concerns the machines posed money-laundering risks, claiming you would have to be the dumbest criminal in the world to think you could launder cash through a private ATM.
Transactions on Next Payment machines are processed by Cuscal, which told the ABC it did "not have any direct relationship" with Next Payment's clients.
Cuscal said Next Payments had provided assurances it was removing ATMs "from locations that may be linked to the illegal tobacco industry".
Industry sources have told the ABC that atm2go terminals used Eftex to process transactions.
Written by: Rory Callinan, ABC News.
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