Entain ‘missed the mark’, but will fight AUSTRAC case if it goes to court

Entain has filed a defence to AUSTRAC’s statement of claim against it in the Federal Court, showing its determination to fight the civil action, while admitting that its previous anti-money laundering program “did not meet expectations”.

While Entain continues to pursue mediation with AUSTRAC to resolve the issue, it has been forced to respond to the financial crimes regulator’s amended statement of claim issued in August.

The response notes that Entain, which operates the Ladbrokes and Neds brands in Australia, acknowledged deficiencies in its anti-money laundering and counter-terrorism financing (AML/CTF) compliance program over a six-year period from December 2018 to August 2024.

But it still disputes a number of significant allegations and interpretations made in the statement of claim and is willing to bring them to court if needed.

“We sincerely regret that our old program didn’t meet expectations. We followed expert advice at the time but, looking back, we recognise the old program missed the mark,” Andrew Vouris, chief executive of Entain Australia and New Zealand, said.

“We’ve acknowledged our shortcomings, taken responsibility, and spent the last two years learning from them and fixing them.

“Entain has fundamentally transformed its approach to compliance and now operates a market-leading program, underpinned by a compliance-first culture – to ‘win, but not at all costs’.”

The wagering giant said it had increased its AML/CTF staffing by a factor of 10, while investing tens of millions of dollars in new systems and technology.

It also cited new governance, controls, processes, and oversight of risks, as well as a new leadership team committed to a compliance-first culture.

Entain said it had also acted to close channels that represented higher risk, such as cash payments, which previously accounted for less than 2 per cent of deposits.

AUSTRAC’s case centres on the use of 17 “high-risk” accounts, with Entain saying in its defence that it had closed those accounts before legal proceedings commenced, and some as far back as 2020.

AUSTRAC’s investigation found Entain allowed those high-risk customers to spend more than $152 million without proper checks and balances in place.  

A significant part of AUSTRAC’s case was dropped, in which Entain was initially described as a “high-risk remittance provider”, despite the regulators own rules excluding wagering operators from that category.

However, it could still face fines in the hundreds of millions of dollars if the court sides with AUSTRAC. 

It is the first time AUSTRAC has brought civil penalty proceedings against businesses operating in the online betting sector.

A Federal Court case would be the first legal test of the AML/CTF Act in the online betting context.

In 2017, Tabcorp was fined $45 million in the Federal Court for breaches of the AML/CTF Act, but in that case, only the penalty and not the charges were determined in court.

AUSTRAC has previously brought action to court against casinos, with Crown paying $450 million in penalties and SkyCity paying a $67 million penalty for breaches of the AML/CTF Act.

The financial crimes regulator has also brought enforceable undertakings against wagering company Sportsbet, while Bet365 is currenty under investigation by AUSTRAC.