Next Payments, one of Australia’s leading private ATM providers backed by Macquarie Group, is withdrawing over 40 machines from sites suspected of selling illegal tobacco products.
The decision follows a media investigation revealing that some ATM companies may have been enabling illicit activity by placing machines in high-volume illegal cigarette retailers. These stores often operate on a cash-only basis, making it harder for authorities to trace financial transactions and detect criminal operations.
Next Payments acted after discovering some of its ATMs were located in businesses either facing legal action or run by individuals with prior convictions related to tobacco smuggling or handling proceeds of crime. The company has since begun cutting ties with any retail outlet identified as operating illegally.
Transaction services provider EFTEX, which supports over 5,000 ATMs nationally, has also taken action. In response to growing regulatory pressure, it announced it would stop processing payments for ATMs situated in tobacco stores and other high-risk locations.
The illegal tobacco market in Australia has surged in recent years, largely due to sharp increases in government taxes. A legal pack of 20 cigarettes can cost nearly $28 in duty alone, while illegal alternatives are often sold for around $8. The lower prices have fuelled consumer demand and encouraged a thriving underground trade.
These illicit stores usually demand cash payments, and if customers arrive without cash, they are directed to in-store ATMs. This practice creates an opaque financial environment that frustrates the efforts of the Australian Taxation Office and law enforcement agencies to monitor and trace revenue streams.
Private ATMs in these locations have been found to process up to three times the volume of transactions compared to standard bank machines. In some high-traffic illegal tobacco shops, two ATMs have been installed to meet demand.
The Australian Criminal Intelligence Commission has flagged the high cash turnover in certain industries, particularly where private ATMs are present, as an attractive opportunity for organised crime groups. The ability to process large volumes of untraceable cash makes these machines vulnerable to abuse.
A particular concern is the way private ATMs can facilitate money laundering. Unlike ATMs managed by major banks, private machines are not subject to anti-money laundering regulations. When merchants are allowed to load their own cash into these devices, it opens the door for proceeds of crime to be pushed through the machines. Once a customer withdraws this cash, the funds are credited to the merchant’s account without the same scrutiny that bank deposits would trigger.
This loophole allows illicit funds to re-enter the legitimate financial system under the radar, complicating efforts to track and disrupt the financial operations of criminal networks.
One instance revealed by investigators involved a convicted drug trafficker who sourced a fleet of ATMs from Queensland-based atm2go. It’s alleged he planned to use these machines to launder money obtained from cannabis sales. Atm2go has multiple ATMs placed in illicit tobacco stores but has declined to comment on the matter.
Melbourne-headquartered Next Payments is almost half-owned by Macquarie Group, which holds a 47% stake. The company has stated that only a small portion of its business—around 1%—is linked to tobacco-related transactions. It has committed to assisting authorities and ensuring that its machines are not located in non-compliant venues.
Transactions on Next Payments’ ATMs are processed by Cuscal, which has clarified it does not deal directly with the retailers using these machines. Cuscal noted that it had received assurances from Next Payments regarding the removal of devices from locations potentially linked to the illicit tobacco trade.
Industry sources have indicated that machines provided by atm2go are likely processed through EFTEX, tying them to the broader shake-up of financial service providers responding to the increased scrutiny.
As government agencies and financial service companies step up their efforts to curtail the illegal tobacco industry, the role of ATMs in enabling cash-based transactions and money laundering is facing new levels of attention. The removal of these machines from suspicious locations marks a broader push to close regulatory loopholes and disrupt criminal enterprises reliant on cash flow.
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