Entain to face civil penalty proceedings in Australia over alleged AML failings
Operator could face “potentially material” financial penalty after Australian government body concludes investigation into historical claims of non-compliance
The Australian Transaction Reports and Analytics Centre (AUSTRAC) has commenced civil penalty proceedings against Entain over alleged “serious and systemic non-compliance” with AML and counter-terrorism financing (CTF) laws.
AUSTRAC will take Entain to federal court following the conclusion of its investigation, which was revealed in September 2022.
Entain, which runs the Ladbrokes, Neds and Sportingbet brands in the country, was being investigated for potential historical failings between July 2016 and June 2020.
AUSTRAC has now published some of its key allegations against the operator ahead of a court hearing date being announced.
The government agency alleged that Entain’s board and senior management did not have “appropriate” oversight of the company’s AML and CTF policies, which left it vulnerable to risk and “criminal exploitation”.
The 24/7 nature of Entain’s online business was also called into question, with AUSTRAC arguing it had created risks that persons unknown to the company could “could access and use Entain’s betting platform including through third-party providers”.
Also, in terms of third parties, AUSTRAC alleged that adjected businesses or individuals had accepted cash and other deposits on behalf of Entain in ways that “could obscure the proceeds of crime”.
It is also alleged that Entain “did not have appropriate controls to confirm the identity of customers” in these cases.
These payment methods, defined as inward payment channels by AUSTRAC, included EFTs, cash-in terminals in retail settings, affiliates or business development managers contracted by Entain, and prepaid cards.
Finally, AUSTRAC said Entain did not conduct checks on 17 higher-risk customers during the historical period.
Those 17 customers deposited more than A$152m into their betting accounts and withdrew A$105m, according to AUSTRAC.
AUSTRAC said: “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.
“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’”.
As part of the statement released by AUSTRAC, the body claimed Entain had contravened the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 on an “innumerable number of occasions”.
Each contravention could attract a minimal civil penalty of A$21m (£10.6m) and A$33m for section 81 and section 36 of the act, respectively.
Brendan Thomas, AUSTRAC CEO, said: “AUSTRAC’s proceedings allege that Entain did not develop and maintain a compliant anti-money laundering 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.
“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.”
Entain said it had “fully” cooperated with AUSTRAC during its investigation and in December 2022 made “further enhancements” to its AML and CTF systems, which are due to completed in June 2025.
On the potential financial penalties, the group said that the outcome remains “uncertain” but that the end result could be “potentially material”.
Gavin Isaacs, Entain CEO, confirmed the FTSE 100 firm would take the allegations “extremely seriously” following AUSTRAC’s announcement.
He said: “We have cooperated fully with AUSTRAC throughout its investigation and we are implementing further enhancements to Entain Australia’s AML and CTF compliance arrangements.
“While 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,” he added.
Entain’s shares were down 6.2%, at the time of writing, to 764.40p.