The Canberra Southern Cross Club has been accused of "extensive, long-standing, systemic and serious non-compliance" with anti-money laundering and counter-terrorism financing laws.
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AUSTRAC, the federal government's financial intelligence agency, has ordered the club to appoint an external auditor within 28 days to assess and help improve its "inadequate" compliance with the laws after finding the club had no transaction monitoring program and "significantly deficient" customer identification procedures.
The club's CEO Ian Mackay said it would comply with the Australian Transaction Reports and Analysis Centre order, but said there was no suggestion money laundering or terrorism funding had taken place through the club's venues.
"I've only been with the business nine months so what has been put forward has come as somewhat of a surprise, but regardless of that our strict compliance to anti-money laundering policies is non-negotiable," he said.
"It's very strongly our view that there has been no money laundering and there's been no evidence presented of that, this is about compliance to procedures.
"If we aren't complying we must comply and we will comply very, very quickly."
Mr Mackay said the club's procedures to reduce the risk of money laundering and terrorism funding would be subject to the audit.
"Anywhere that there's large sums of money that go through, such as in clubs and pubs where large amounts of cash are, there is always the risk [of money laundering], but we don't regard that as the issue here," he said.
As well as the club's current compliance with the laws, the auditor will also need to assess its capacity and steps needed to comply with the obligations.
AUSTRAC will use a copy of the audit report, required within 112 days, to determine if it takes "further enforcement action" against the club, which could include fines.
The Southern Cross club is only the third entity in Australia to be issued with a written notice for an external audit since June 2010, the AUSTRAC website shows.
AUSTRAC CEO Paul Jevtovic said the unit would make use of the "full suite of its powers" if further action was required against the club.
"Businesses which fail to meet their AML/CTF obligations are not playing their part in protecting the Australian community from serious and organised crime," he said.
"AUSTRAC takes its role in combating money laundering and terrorism financing very seriously and AUSTRAC will not hesitate to take enforcement action where appropriate."
Last week AUSTRAC issued a record fine of $336,600 to remittance network provider MoneyGram Payment Systems for "systemic contraventions" of Australia's anti-money laundering and counter-terrorism financing laws following a fine of $122,400 issued to the company in January.
It was the fourth infringement notice issued by AUSTRAC for contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act.
