Australian Transaction Reports and Analysis Centre (AUSTRAC) has accused Entain Group, operator of sites like Ladbrokes and Neds, of serious breaches of Australia’s AML/CTF laws.
This marks the first time the financial watchdog has taken civil penalty action against an online gambling company, highlighting the country’s increasing scrutiny of the industry’s compliance with financial crime regulations.
Brendan Thomas, CEO of AUSTRAC, commented: “AUSTRAC’s proceedings allege that Entain did not develop and maintain a compliant AML programme and failed to identify and assess the risks it faced. 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.”
AUSTRAC alleges that Entain’s board and senior management failed to provide adequate oversight of its AML/CTF programme, limiting the company’s ability to identify and manage the money laundering and terrorism financing risks it faced.
Entain’s 24/7 operations through its website and app allegedly allowed unknown individuals, including those using third-party providers, to access and exploit its betting platform.
The watchdog further claims that third parties, such as businesses and individuals, accepted cash and other deposits on Entain’s behalf, which were then credited to betting accounts in ways that could obscure criminal proceeds.
AUSTRAC noted that cash, being less transparent, carries a higher risk of originating from crime.
Additionally, Entain allegedly failed to implement proper controls to verify the identity and source of funds from customers making these deposits. It also did not conduct sufficient checks on 17 high-risk customers, including instances where its online betting platforms were potentially exploited by criminals to launder the proceeds of serious crime.
AUSTRAC claims Entain even deliberately obscured the identities of some high-risk customers in its systems by using pseudonyms, reportedly to “protect their privacy.”
“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,” 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 case is now with the Federal Court of Australia, which will decide whether Entain violated the Act and, if so, what penalties or orders should be issued. AUSTRAC has confirmed it will not make any further comments while the matter is before the Court.
Thomas concluded: “AUSTRAC continues to actively driving out money laundering opportunities in Australia’s gambling industry and we’ll be tireless in our efforts to remove the ability for criminal to use our financial system to their own gain.”
Earlier this year, AUSTRAC highlighted the rising use of digital currencies in money laundering and terrorist financing, stressing the need for law enforcement to adapt to these emerging risks.
