Australia's biggest mint allowed a notorious former bikie to buy $27,000 worth of gold, no questions asked.
A Four Corners investigation has uncovered major holes in the compliance regime of the WA government-owned Perth Mint — failings that could cost taxpayers billions of dollars.
The mint is required by law to conduct rigorous checks on the sale of its gold to high-risk customers and examine their source of funds.
That did not happen when the former sergeant-at-arms of the Hells Angels motorcycle gang in WA, Dayne Brajkovich, walked into the Perth Mint gift shop to buy gold in June last year.
Mr Brajkovich has spent time in jail for possessing a commercial quantity of MDMA and was recently convicted of assault and being armed in public.
He is no longer a member of the Hells Angels and Four Corners is not suggesting his money is sourced from illegal activity but Mr Brajkovich says the Perth Mint only asked him for his driver's licence.
Author and financial crime expert Nathan Lynch says Mr Brajkovich, who shot to fame in Perth after a public brawl with a rival gang leader, should have been classified as a high-risk customer.
"He's a well-known entity, and it would be pretty hard to argue that an organisation didn't know about that reputation," Mr Lynch says.
"But that's beside the point. They have a legal obligation to look into customers that come in their door, to know who they are and to look into their background.
"Dayne Brajkovich is absolutely a red flag."
The revelation could prove highly embarrassing for WA Premier Mark McGowan, whose government has taken a hard line on motorcycle gangs. Mr McGowan had ministerial responsibility for the mint for four years until March 2021.
It may also prompt questions from Australia's financial crime agency, AUSTRAC, which is currently investigating the mint for its compliance with anti-money laundering and counterterrorism financing laws.
Financial crime expert Moyara Ruehsen says "gold is a money launderer's dream".
"You can melt it; you can move it. It's very difficult to trace to its point of origin," she says.
Like Westpac and the Commonwealth Bank, the mint could be fined hundreds of millions of dollars if it is found to have breached these laws.
Any fines would ultimately be paid for by WA taxpayers, as the mint is the only refinery in the world that is underwritten by a government.
Secret clients' millions stored in Perth Mint vault
Law enforcement is damning in its assessment of the systemic failures in the mint's regulatory compliance controls.
For years clients of Euro Pacific Bank, which operated from the tax haven of Puerto Rico between 2017 and 2022, were able to buy gold and store it in Perth Mint's vault.
At one point, Perth Mint allowed $25 million of Euro Pacific clients' funds to be held in a single account.
It was held through an omnibus account, where individual clients' funds are bundled together and transferred in bulk to keep customers' identities secret from the mint. The bank denies this was the case.
Authorities suspect Perth Mint was likely inadvertently being used by fraudsters and money launderers to move their funds.
John Chevis, a former federal police officer who advises the United Nations on money laundering, says the mint has left itself exposed to hefty fines or sanctions if it has failed to conduct adequate checks on Euro Pacific clients.
"The worst case is that you've potentially got terrorist organisations, drug cartels, despots from around the world, kleptocrats … potentially holding gold in the Perth Mint," he says.
Euro Pacific says to its knowledge, none of its customers who made Perth Mint purchases had criminal records or any association with organised crime.
In July last year, Euro Pacific was shut down by authorities in Puerto Rico for not holding enough capital. Its clients are under investigation in at least five countries, including Australia.
"There were hundreds, if not thousands of [Euro Pacific] clients who were deliberately not just avoiding taxes through legal loopholes, but actually engaging in illegal tax evasion," Ms Ruehsen alleges.
No charges have ever been laid against Euro Pacific or any of its personnel.
The bank says it always fully complied with all laws, including by vetting account holders and individual transactions and was subject to annual third-party compliance audits. It says it did not facilitate tax evasion or money laundering.
The Perth Mint says its "customer relationship with Euro Pacific Bank was ceased in November 2020". It declined to say if individual customer accounts were also shut down.
The AUSTRAC investigation is due to deliver its audit report into the Perth Mint by May.
Mint at risk of possible criminal charges
The most serious failing by the Perth Mint when it comes to its anti-money laundering obligations is not declaring international movements of money.
Any institution which receives funds from offshore must register these transfers with AUSTRAC.
Four Corners has been told the mint failed to register more than 5,000 of these transactions in just nine months. Each failure can be punished with a fine of up to $21 million.
These are not just civil penalties, this failure can also bring criminal charges.
Mr Lynch says it is highly unusual for Australian organisations, let alone government-owned corporations, to get caught up in the criminal aspects of the anti-money laundering regime.
"In the past, there have been huge breaches of the civil provisions, but, when it comes to failing to register as a remitter, which is a potential criminal offence, that is completely unprecedented."
The Perth Mint told Four Corners the matter was complex, it was obtaining specialist legal advice and would take appropriate action once that was finalised.
It also admits it has not complied with civil anti-money laundering regulations in the past.
Mark McGowan initially played down the seriousness of the AUSTRAC investigation, labelling the mint's failures as technical breaches.
"It's not a fraud issue or an impropriety issue or anything of that nature, it's some administrative failing. But I'm sure they'll rectify it as soon as they can," he told a press conference last year.
When asked by Four Corners if he stood by those comments, the premier was far less dismissive of the investigation.
"There's been a change of management … at the Perth Mint over the course of the last couple of years.
"There is an audit being undertaken, the mint is complying with the processes under the audit and the mint itself is investing heavily in anti-criminal behaviour and compliance measures."
Watch the full investigation on ABC iview.
