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After a 27-month investigation, Australian financial transactions regulator AUSTRAC has launched a civil prosecution against Entain's Australian subsidiary over “serious and symptomatic non-compliance” with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
AUSTRAC’s first prosecution of an online betting entity accuses Entain Group’s board and executives of “systemic failures” in overseeing some A$11bn ($7bn) in customer deposits between January 2019 and June 2024, including alleged attempts to obscure the identities of customers.
The regulator alleges a smorgasbord of failure in implementing the company’s AML/CTF program; know your customer (KYC) risk stemming from a 24-hour betting platform; non-transparent third-party transactions that obscured fund sources; inappropriate customer identification protocols; and inadequate checks on 17 “higher risk customers”.
“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,” AUSTRAC chief executive Brendan Thomas said in a statement on Monday (December 16). “We are alleging this left the company at serious risk of criminal exploitation.”
The regulator said Entain breached two sections of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 “on an innumerable number of occasions”, noting that a single breach can trigger a civil penalty of up to A$33m ($21m).
In so doing, the company exposed its banking partners and other groups to money laundering and terrorism financing risk, and in turn the wider Australian financial system, AUSTRAC told Federal Court.
Thomas said Entain’s Australian operations, including the brands Ladbrokes, Neds, Betstar and bookmaker.com.au, are “part of one of the world's largest sports betting and gaming groups".
“The online betting sector, and all other businesses regulated by AUSTRAC, must take their AML/CTF obligations seriously,” he said.
“This includes ensuring they have appropriate procedures to know who their customer is, even when they rely on third parties to process transactions.”
In a concise statement presented to Federal Court, AUSTRAC said that of the 17 higher-risk customers, whose names are confidential, some were “subject to a law enforcement inquiry and/or integrity request from a racing and gambling regulator”.
Some of the identified customers purportedly had been “arrested, charged or convicted in connection with offences, including corruption, money laundering, drug offences and other offences”.
In each of the 17 cases, Entain continued to allow bets to be taken despite these and 11 other red flags for investigation of the gamblers’ backgrounds, including the size, frequency and acceleration of bets, the use of credit cards, poor KYC controls, risk involving the gamblers’ jurisdictions, and alleged company awareness of income source and/or criminal records.
Entain submitted suspicious transaction reports to AUSTRAC that identified some of these risks, yet continued to provide services to them without appropriate due diligence, resulting in a total of A$152m ($96m) in deposits and A$105m in withdrawals from the gamblers’ accounts over the period investigated by AUSTRAC, according to the statement.
Among AUSTRAC’s more damning allegations is that Entain operated a “pseudonym register” for customers who wanted to “protect their privacy”.
While these customers were subject to the company’s AML/CTF program, the program itself failed to “identify or assess the inherent … risks” of transaction channels, customers and customer types, and foreign jurisdictions, the concise statement said.
“Entain’s non-compliance with … the Act was long-standing, systemic and reflective of inadequate oversight by Entain’s board and senior management,” it said.
“Entain avoided expending funds that should have been invested in compliance including on automated solutions, staffing, training and the development of AML/CTF controls.”
Entain said on Monday that it is “carefully considering” the AUSTRAC allegations and warned of a “potentially material” fine.
“We note the allegations made, which we take extremely seriously,” CEO Gavin Isaacs 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.
“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,” Isaacs said.
Although the first to be prosecuted, Entain is one of three known sports-betting companies to be extensively investigated by AUSTRAC over AML/CTF failings.
Flutter subsidiary Sportsbet escaped a fine earlier in 2024 but was ordered to enter a two-year remedial period. AUSTRAC’s probe into global gambling giant bet365 along similar lines has yet to be resolved.
AUSTRAC’s probe into casino operator The Star Entertainment Group is ongoing after heavily fining rivals Crown Resorts and SkyCity Entertainment Group in recent years, following a stiff fine for wagering monopoly Tabcorp Holdings in 2017. The regulator is also probing Australia’s ubiquitous slot machine segment.
