An investigation has begun in Australia over allegations that Entain brands Ladbrokes and NEDs fell short when it comes to compliance.
It is alleged that the operator had “serious and systemic non-compliance” with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
Brendan Thomas, CEO of AUSTRAC, stated: “We allege that Entain failed to develop and maintain a compliant anti-money laundering programme and did not adequately identify or assess the risks it faced. This, in turn, left the company exposed to serious risks of criminal exploitation.”
The watchdog deems that Entain’s brands are vulnerable to criminal exploitation, including fraud, scams, and corruption. Allegations against Entain include:
- A lack of appropriate oversight of its AML/CTF programme by the board and senior management.
- Entain’s Australian brands being exposed to risks due to operating a 24/7 online platform accessible by unknown users and third-party providers.
- Acceptance of cash deposits by third parties for betting accounts, increasing the risk of money laundering.
- Failure to confirm the identity and funding sources of some customers, including 17 higher-risk individuals.
Further allegations include claims that Entain deliberately obscured the identities of high-risk customers by allowing the use of pseudonyms under the guise of protecting their privacy, potentially concealing criminal activity.
“This is the first time AUSTRAC has brought civil penalty proceedings against businesses operating in the online betting sector, and the Australian arm of Entain is part of one of the world’s largest sports betting and gaming groups,” Brendan Thomas said.
“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.”
The findings of AUSTRAC’s investigation will be presented to the Federal Court, which will determine whether Entain violated the AML/CTF Act and impose any appropriate penalties. Whilst the case is ongoing, AUSTRAC will refrain from further comment, reiterating the importance of businesses ensuring robust customer identification processes and effective risk management to combat money laundering within Australia’s gambling industry.
AUSTRAC continues to intensify its focus on the gambling industry as part of its efforts to combat money laundering. This follows significant penalties, including the Federal Court’s order for Crown to pay $450m over two years in 2023 and SkyCity’s $63m penalty this year for breaches of the AML/CTF Act.
The board of Entain acknowledged that AUSTRAC has commenced civil penalty proceedings in the Federal Court against its Australian subsidiary. The FTSE-listed firm maintains that it has cooperated fully with AUSTRAC throughout the investigation, which began in September 2022. Furthermore, it has initiated a programme of enhancements to its AML/CTF systems and processes.
Entain Group CEO Gavin Isaacs 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.”
