AUSTRAC has initiated civil penalty proceedings against Entain Group Pty Ltd (Entain), the operator of major online betting platforms such as Ladbrokes and Neds. The Federal Court case revolves around serious allegations of systemic non-compliance with Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws. These accusations highlight the gambling industry’s vulnerability to criminal exploitation and the critical importance of stringent compliance.

Brendan Thomas, CEO of AUSTRAC, emphasized the severity of the situation, stating: “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.”

Key Failures in Entain’s AML/CTF Program

AUSTRAC’s investigation outlines multiple critical lapses in Entain’s approach to AML compliance. These failures include:

1. Weak Oversight by Leadership: Entain’s board and senior management reportedly lacked proper oversight of the company’s AML/CTF program. This deficiency hindered their ability to identify and address money laundering and terrorism financing risks effectively.
2. Customer Identity and Risk Assessment Issues: The company allegedly operated its 24/7 online betting services in ways that allowed anonymous users to exploit the platform. Third-party providers were permitted to deposit funds into betting accounts, obscuring the origin of funds and increasing the likelihood of accepting proceeds of crime. Entain is also accused of inadequately verifying customer identities and failing to trace the source of funds deposited by higher-risk customers.
3. High-Risk Customer Management: AUSTRAC’s findings include incidents where Entain did not conduct adequate checks on high-risk clients. Some of these clients reportedly used pseudonyms on the platform, with Entain allegedly facilitating this anonymity to “protect their privacy.” Such practices not only obscure potential risks but also make the company’s systems highly susceptible to exploitation by criminals.

Implications for Australia’s Gambling Sector

This case marks AUSTRAC’s first civil penalty proceedings against an online betting operator, underscoring a broader focus on money laundering vulnerabilities in Australia’s gambling sector. In recent years, other high-profile cases, such as penalties against Crown and SkyCity, have illustrated the sector’s susceptibility to financial crime. AUSTRAC’s ongoing enforcement actions signal a commitment to tightening regulatory controls across the industry.

The National Risk Assessment report released earlier this year further highlighted the exposure of online betting agencies to money laundering. This resource serves as a vital guide for businesses to understand and mitigate their risks. As Thomas stated, “The online betting sector, and all other businesses regulated by AUSTRAC, must take their AML/CTF obligations seriously.”

AUSTRAC’s Broader Enforcement Actions

Entain’s case is part of a larger regulatory push by AUSTRAC to combat money laundering in the gambling industry. Other notable actions include:

• A $450 million penalty against Crown Resorts in 2023.
• A $63 million penalty for SkyCity for AML/CTF breaches.
• Ongoing Federal Court proceedings against Star Entertainment Group.
• An enforceable undertaking accepted from Sportsbet to address its compliance gaps.

These measures aim to ensure businesses take active steps to prevent their platforms from being exploited by criminal networks.

The Road Ahead for Entain

The Federal Court will now determine whether Entain contravened the AML/CTF Act and decide on potential penalties. AUSTRAC has declined further comment while the matter is before the Court. However, the outcome of this case will likely have significant implications for Entain and the broader gambling sector.

As Brendan Thomas concluded, “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 to their own gain.”

Related Links

• AUSTRAC’s Enforcement Actions
• National Risk Assessment 2024 Report
• Crown Resorts Penalty Case
• SkyCity AML Breach Case
• Star Entertainment Federal Court Proceedings

Other FinCrime Central Links Related to Gambling

• New Zealand Casino Faces Civil Action for AML Failures
• The New UK Gambling Commission Changes Are A Game-Changer for AML Compliance

Source: AUSTRAC