Entain, the parent company of wagering brands Ladbrokes and Neds, will be brought before the Federal Court by AUSTRAC over allegations of serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws.
The enforcement action by AUSTRAC follows a two-and-half year investigation and, if found guilty, Entain could be subject to substantial fines from the Federal Court.
“AUSTRAC’s proceedings allege that Entain did not develop and maintain a compliant anti-money laundering program and failed to identify and assess the risks it faced. We are alleging this left the company at serious risk of criminal exploitation,” AUSTRAC CEO Brendan Thomas said.
“Money laundering is often a symptom of serious criminal activity, including fraud, scams and corruption, all of which have equally serious effects on our communities,” he said.
Among AUSTRAC’s allegations are that Entain’s board and senior management did not have appropriate oversight of its AML/CTF program.
It is also alleged that that the 24/7 nature of its business “created risks that persons unknown to Entain could access and use Entain's betting platform including through third party providers” and “third parties, including businesses and individuals, accepted cash and other deposits on behalf of Entain to be credited into betting accounts in ways that could obscure the proceeds of crime”.
AUSTRAC also contends that Entain did not have appropriate controls to confirm the identity of customers making these deposits and the source of this money.
“Entain did not conduct appropriate checks on 17 higher risk customers, including examples where Entain did not appropriately deal with the risk that its online betting sites were being exploited by criminals to spend the proceeds of serious crime,” the AUSTRAC statement alleges.
“This includes allegations that Entain deliberately obscured the identity of some high risk customers, on its own systems, through the use of pseudonyms to “protect their privacy”.”
Bren O’Brien
Thomas said it is the first time AUSTRAC has brought civil penalty proceedings against businesses operating in the online betting sector.
“The online betting sector, and all other businesses regulated by AUSTRAC, must take their AML/CTF obligations seriously. This includes ensuring they have appropriate procedures to know who their customer is, even when they rely on third parties to process transactions,” he said.
Entain‘s recently appointed global CEO Gavin Isaacs issues a statement in response to the action.
“We note the allegations made, which we take extremely seriously,” he said.
“We have co-operated fully with AUSTRAC throughout its investigation and we are implementing further enhancements to Entain Australia's AML and CTF compliance arrangements. Whilst we still have some further improvements to make, we expect these to be implemented in line with the plan we communicated to AUSTRAC in 2023.
“We are committed to keeping financial crime out of gambling and continue to play our part in supporting a well-regulated and compliant sector for our customers, stakeholders and the wider community.”
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In previous and unrelated actions surrounding AML and CTF in the gambling sector, the Federal Court has ordered Crown to pay $450 million in penalties over two years in 2023, while SkyCity was ordered to pay a $63 million penalty.
“We are committed to keeping financial crime out of gambling and continue to play our part in supporting a well-regulated and compliant sector for our customers, stakeholders and the wider community." - Entain CEO Gavin Isaacs
AUSTRAC has also accepted an enforceable undertaking from Sportsbet, while it is pursuing a Federal Court case against Star.
“AUSTRAC continues to actively drive out money laundering opportunities in Australia’s gambling industry and we’ll be tireless in our efforts to remove the ability for criminals to use our financial system for their own gain,” Thomas said.
It will offer no further comment on the enforcement action against Entain while the matter is before the Court.
Bren O’Brien
Entain confirmed the investigation by AUSTRAC was announced in September 2022 and in December 2022 it commenced a programme of further enhancements to its anti-money laundering and counter-terrorist financing systems and processes.
“We note the previous penalties in AUSTRAC proceedings in the gaming sector and, whilst the outcome of the civil penalty proceedings against Entain Australia is uncertain, it may result in a penalty being levied which could be potentially material,” the Entain statement said.
“The level of any penalty is ultimately a matter for the Federal Court of Australia, which proceedings may take some time.”
Bren O’Brien
