Today, Austrac has announced its decision to pursue civil penalties in a federal court against the online betting company Entain, marking a first in its history. Entain, which runs popular brands like Ladbrokes and Neds in Australia, hinted that the lawsuit might lead to significant financial repercussions for the company.
### What Charges Does Entain Face?
Austrac’s inquiry into Entain began in September 2022 and uncovered numerous deficiencies in Entain’s anti-money laundering and counter-terrorism financing (AML/CTF) protocols. Key among these issues were a lack of proper oversight by Entain’s board and senior management, which compromised its ability to detect and mitigate risks, exposing it to potential criminal misuse. Furthermore, Austrac identified that Entain permitted third parties to handle cash deposits for its betting accounts, potentially enabling the use of illicit funds without enough verification of the depositor’s identity or the money’s origin.
Austrac also highlighted the operational risks posed by Entain’s 24/7 online services, which could be accessed by unknown individuals through third-party providers. Additionally, the agency noted Entain’s failure to conduct thorough assessments on 17 high-risk customers, raising concerns about the misuse of its platform by those with criminal intents. The operator allegedly concealed some customers’ identities with pseudonyms under the guise of privacy protection.
### Austrac: “Entain at Serious Risk of Criminal Exploitation”
Brendan Thomas, Austrac’s chief executive, expressed alarm given Entain’s status as a major global sports betting and gaming entity. He stated, “Austrac’s allegations suggest that Entain’s inadequate AML program left it vulnerable to criminal exploitation. Money laundering is often linked to grave criminal acts such as fraud, scams, and corruption, impacting communities severely.”
The Federal Court of Australia is now tasked with determining whether Entain breached the country’s AML/CTF regulations. Austrac has withheld further comments while the legal proceedings are underway.
### Entain Acknowledges a Potential Penalty
In its response to the proceedings, Entain mentioned that the legal process might be lengthy. Although the outcome is uncertain, the company acknowledged the likelihood of a substantial penalty. Previous cases against land-based casinos in Australia have resulted in fines amounting to millions of Dollars.
Entain emphasized its cooperation with Austrac during the investigation and the introduction of an enhanced AML/CTF program in December 2022, with a timeline for the final enhancements set for completion by mid-2025. CEO Gavin Isaacs reaffirmed the company’s commitment to preventing financial crime within gambling and supporting a robust regulatory framework for its stakeholders.
### Austrac Cracks Down on Gambling-Related Breaches
This is the inaugural case against an online betting platform in court, although Austrac has previously targeted physical casino operators. For instance, earlier this year, SkyCity Entertainment Group agreed to a AU$67 million fine over AML issues at its Adelaide casino. Similarly, Austrac’s actions against Star Entertainment Group and Crown resulted in significant penalties and operational challenges.
In the online sector, Austrac accepted an enforceable agreement from SportsBet, following AML/CTF shortcomings, and has initiated an investigation into Bet365 for similar concerns. Both cases involve enforcing strict compliance and auditing measures to rectify deficiencies and enhance operations.