The Australian Transaction Reports and Analysis Centre (Austrac) has initiated civil penalty proceedings over “serious and systematic” non-compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) laws at Entain.
Announced today (16 December), this represents the first time Austrac has brought civil penalty proceedings against an online betting business. Entain, which operates Ladbrokes and Neds in Australia, says the case could result in a “potentially material” penalty for the business.
What charges does Entain face?
Austrac’s investigation of Entain started in September 2022 and identified a litany of failings in its AML/CTF safeguards.
Most notably Austral claims Entain’s board and senior management did not have appropriate oversight of its processes. This limited the operator’s ability to spot the risks it faced, leaving it vulnerable to criminal exploitation.
It also allowed third parties to accept cash and other deposits on behalf of the business to be credited to betting accounts. This meant people could fund gambling using the proceeds of crime. Entain did not have the appropriate controls to verify the identify of these customers, or to check the source of the cash deposits.
Austrac also noted that Entain operated a 24/7 business through its website and app. This created risks that people unknown to Entain could access and use its betting platform including through third-party providers, it said.
Entain also failed to carry out appropriate checks on 17 higher risk customers, Austrac added. This meant the risk of sites being exploited by those looking to spend the proceeds of crime was raised.
The operator also allegedly deliberately obscured the identity of some customers, using pseudonyms to “protect their privacy”.
Austrac: “Entain at serious risk of criminal exploitation”
Austrac chief executive Brendan Thomas said the case is particularly concerning as Entain is one of the world’s largest sports betting and gaming groups.
“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,” Thomas explained. “We are alleging this left the company at serious risk of criminal exploitation.
“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.”
The Federal Court of Australia will now decide if Entain contravened Australia’s AML/CTF Act and any action to take. Austrac said it will not provide further comment while the matter is before the court.
Entain acknowledges a penalty is possible
Court proceedings “may take some time”, Entain noted in its response to the filing. While the ultimate outcome of the case is unclear, it could result in a material penalty. Previous fines dished out to land-based casinos in Australia have totalled tens or even hundreds of millions of dollars.
In mitigation, Entain makes clear it co-operated fully with Austrac during its investigation. It also initiated a programme to improve AML and CTF measures in Australia starting December 2022. These improvements were outlined to Austrac in 2023 and the final changes are to be completed by June 2025.
“We note the allegations made, which we take extremely seriously,” Entain CEO Gavin Isaacs said.
“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.”
While this is the first incidence of court action against an online betting operator, Austrac has taken businesses in the land-based sector to court – as referenced by Entain in its response.
Earlier this year, SkyCity Entertainment Group settled a similar AML/CTF case with Austrac. SkyCity agreed to pay an AU$67.0 million (£33.8 million/€40.6 million/US$42.7 million) civil penalty over failings at its Adelaide casino.
November 2022 saw Austrac begin Federal Court proceedings against Star Entertainment Group over AML-related issues. This case remains ongoing, with a very real risk of the operator losing state licences.
Action from Austrac also saw the Federal Court order Crown to pay $450 million in penalties over two years. This process completed last year, with the penalty related to failings at its Melbourne and Perth casinos. The operator was found to be “unsuitable” to operate in both Victoria and Western Australia following local investigations.
In the online betting segment, Austrac this year accepted an enforceable undertaking from SportsBet after an initial case launched in November 2022. This was again in reference to AML/CTF failings, with Sportsbet undertaking ongoing remedial action plan to improve its operations.
Also this year, Austrac has commenced an investigation into Bet365 over potential AML and CTF breaches. Austrac initially ordered an audit of Bet365 in 2022 – around the same time it took similar action against SportsBet.
