The Australian Transaction Reports and Analysis Centre (AUSTRAC) has initiated legal proceedings against Entain, accusing the company of “serious and systemic” failures to comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
Following a thorough investigation, which was brought to light in September 2022, AUSTRAC is taking Entain to federal court. The company, which operates the Ladbrokes, Neds, and Sportingbet brands in Australia, was scrutinized for potential historical non-compliance between July 2016 and June 2020.
AUSTRAC has disclosed several significant allegations against Entain in anticipation of the court hearing. The agency claims that Entain’s leadership did not maintain “adequate” oversight of the company’s AML and CTF measures, exposing it to risks and potential “criminal exploitation.”
There were also concerns about the 24/7 nature of Entain’s online operations. AUSTRAC argued that this model might allow unregistered individuals, via third-party services, to use Entain’s betting platform.
Regarding third-party dealings, AUSTRAC alleged that affiliated entities or individuals accepted cash and other deposits for Entain in ways that could “conceal the origins of illicit funds.” Moreover, there were claims of inadequate customer identity verification processes.
AUSTRAC identified certain inward payment channels that could pose risks, including electronic funds transfers, retail cash terminals, and prepaid cards, coupled with the involvement of affiliates or business managers associated with Entain.
Additionally, the agency criticized Entain for not conducting proper checks on 17 high-risk customers during the specified period. These clients deposited over A$152 million and withdrew A$105 million from their accounts, according to AUSTRAC’s findings.
AUSTRAC stated, “Entain inadequately addressed the risk that its online platforms were used by criminals to launder the proceeds of serious crime. This includes allegations that Entain intentionally concealed the identities of high-risk customers through pseudonyms to ‘protect their privacy.’”
Further, AUSTRAC accused Entain of multiple breaches of the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Penalties for each breach could range from A$21 million to A$33 million, depending on the specific section violated.
Brendan Thomas, AUSTRAC’s CEO, remarked, “We are alleging that Entain failed to establish and maintain a robust AML program and did not adequately evaluate the risks, leaving it vulnerable to criminal exploitation. Financial crimes like money laundering are often linked to serious offenses, including fraud and corruption, which have detrimental effects on society.”
Thomas emphasized that the online betting sector and other AUSTRAC-regulated businesses must prioritize their AML/CTF obligations, including customer verification processes, even when third parties handle transactions.
Entain asserted its “full” cooperation with AUSTRAC and announced enhancements to its AML and CTF systems starting December 2022, with plans for completion by June 2025. The company noted that the financial implications of the proceedings are still “uncertain” but could be “significant.”
Entain’s CEO, Gavin Isaacs, emphasized the company’s commitment to addressing the allegations and enhancing compliance. “We are dedicated to preventing financial crime in gambling and supporting a regulated and compliant industry for our customers and the broader community,” he stated.
Following these developments, Entain’s shares dipped by 6.2%, trading at 764.40p.
Originally published on [EGR Intel](https://www.egr.global/intel/news/entain-to-face-civil-penalty-proceedings-in-australia-over-alleged-aml-failings).