### Investigation into Compliance Lapses by Entain Brands in Australia
Australia has launched an investigation into alleged shortcomings in compliance by Entain brands, Ladbrokes and NEDs, particularly concerning anti-money laundering and counter-terrorism financing (AML/CTF) laws.
Authorities suspect that Entain engaged in “serious and systemic non-compliance” with these laws. Brendan Thomas, CEO of AUSTRAC, commented, “We claim that Entain did not establish or uphold an effective anti-money laundering program, leaving gaps in identifying or assessing the risks it faced, thereby exposing the company to significant criminal risks.”
AUSTRAC believes that brands under Entain are susceptible to illicit activities such as fraud, scams, and corruption. The allegations against Entain include:
– Insufficient oversight of its AML/CTF program by its board and senior management.
– Exposure to risks from operating a continuous 24/7 online platform accessible by anonymous users and third-party providers.
– Acceptance of cash deposits from third parties for betting accounts, heightening the risk of money laundering.
– A lack of verification regarding the identity and funding sources of certain customers, including 17 high-risk individuals.
Further allegations suggest that Entain may have deliberately obscured the identities of high-risk clients by permitting pseudonyms, under the pretense of protecting privacy, thereby potentially hiding criminal activity.
“This marks AUSTRAC’s first civil penalty case in the online betting industry, involving the Australian branch of one of the world’s largest sports betting and gaming groups,” added Brendan Thomas.
“The online betting industry, along with all AUSTRAC-regulated businesses, must rigorously adhere to their AML/CTF responsibilities. This includes having reliable procedures to verify customer identity, even when relying on third parties to facilitate transactions.”
AUSTRAC’s investigation results will be submitted to the Federal Court to determine if Entain violated the AML/CTF Act, and decide on any penalties. Until the case concludes, AUSTRAC will withhold further comments but emphasizes the importance of effective customer identification and risk management to prevent money laundering within Australia’s gambling sector.
AUSTRAC is intensifying its oversight of the gambling industry as part of broader efforts to tackle money laundering. This follows significant penalties, such as the Federal Court’s directive for Crown to pay $450 million over two years in 2023, and SkyCity’s $63 million penalty this year for similar infractions.
Entain’s board acknowledged the start of civil penalty proceedings in the Federal Court by AUSTRAC against its Australian division. The FTSE-listed company asserts that it has fully cooperated with AUSTRAC since the investigation began in September 2022, and has started enhancing its AML/CTF systems.
Entain Group CEO, Gavin Isaacs, stated, “We have fully cooperated with AUSTRAC during its investigation and are working on further enhancements to Entain Australia’s AML and CTF compliance arrangements. While there are still improvements to be made, we aim to implement these as per the plan we shared with AUSTRAC in 2023. We are dedicated to keeping gambling free from financial crime, continuing to support a well-regulated and compliant industry for customers, stakeholders, and the community.”