Key points:
- AUSTRAC has initiated Federal Court proceedings against Entain for alleged AML/CTF breaches
- Allegations include inadequate risk assessments, oversight failures and gaps in customer identity verification
- AUSTRAC highlights vulnerabilities in Entain’s operations, including reliance on third parties for cash deposits
- Entain share price has fallen 6.9% in reaction to the news, to £7.58
AUSTRAC, the Australian Transaction Reports and Analysis Centre, has filed civil penalty proceedings against Entain Group, accusing the operator of systemic failures to meet anti-money laundering and counter-terrorism financing (AML/CTF) obligations.
Entain operates several betting platforms, including Ladbrokes and Neds, in Australia.
The Federal Court case focuses on alleged deficiencies in Entain’s AML/CTF program. AUSTRAC claims the company failed to develop robust systems to identify and mitigate risks, particularly those arising from its reliance on third parties to process cash deposits.
This practice allegedly obscured the source of funds and heightened the risk of money laundering.
Brendan Thomas, AUSTRAC CEO, said: “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.”
AUSTRAC alleges that Entain’s oversight mechanisms were inadequate, with its board and senior management failing to address vulnerabilities in its operations.
Specific allegations include:
- Poor monitoring of high-risk customers, some of whom were allowed to use pseudonyms on Entain’s systems.
- Gaps in the verification of customer identities and the source of deposits.
- Inadequate risk assessments for its 24/7 operations, which created opportunities for misuse of its betting platform.
Good to know: The regulator’s action against Entain marks its first civil penalty proceedings in the online betting sector
The Federal Court will determine whether Entain breached the AML/CTF Act and if so, what penalties will apply.
Earlier this year, AUSTRAC accepted an enforceable undertaking from Sportsbet to improve its AML/CTF systems following a review by an external auditor. Sportsbet committed to a remedial action plan overseen by AUSTRAC, aimed at enhancing its capacity to manage money laundering risks.
The agency also imposed significant penalties on other operators, including SkyCity, which was fined $44.6m for compliance breaches.
Entain, of course, had to pay a financial penalty of £585m ($739.9m) for historic dealings in Turkey last year.
