Australia’s financial intelligence agency AUSTRAC has commenced civil penalty proceedings in the Federal Court against Entain’s subsidiary in Australia.

The proceedings against Entain Group Pty, operator of online betting sites including Ladbrokes and Neds, allege serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

“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,” said AUSTRAC CEO Brendan Thomas. “We are alleging this left the company at serious risk of criminal exploitation.

“Money laundering is often a symptom of serious criminal activity, including fraud, scams and corruption, all of which have equally serious effects on our communities.”

The allegations include:

  • Entain’s board and senior management did not have appropriate oversight of its AML/CTF program, which limited its ability to identify the ML/TF risks it faced and its vulnerability to criminal exploitation.
  • Entain operated a 24/7 business through its website and app, which created risks that persons unknown to Entain could access and use Entain’s betting platform including through third party providers.
  • Third parties, including businesses and individuals, accepted cash and other deposits on behalf of Entain to be credited into betting accounts in ways that could obscure the proceeds of crime.
  • Entain did not have appropriate controls to confirm the identity of customers making these deposits and the source of this money.
  • Entain did not conduct appropriate checks on 17 higher risk customers, including examples where Entain did not appropriately deal with the risk that its online betting sites were being exploited by criminals to spend the proceeds of serious crime. This includes allegations that Entain deliberately obscured the identity of some high risk customers, on its own systems, through the use of pseudonyms to “protect their privacy”.

“This is the first time AUSTRAC has brought civil penalty proceedings against businesses operating in the online betting sector, and the Australian arm of Entain is part of one of the world’s largest sports betting and gaming groups,” continued Thomas.

“The online betting sector, and all other businesses regulated by AUSTRAC, must take their AML/CTF obligations seriously. This includes ensuring they have appropriate procedures to know who their customer is, even when they rely on third parties to process transactions.”

Entain is carefully considering the Originating Application and Concise Statement filed and served by AUSTRAC, identified as part of an enforcement investigation previously announced in September 2022.

Entain said it has co-operated fully with AUSTRAC throughout its investigation, and in December 2022 commenced a programme of further enhancements to Entain Australia’s AML and CTF systems and processes.

This dedicated programme, as communicated to AUSTRAC, is due to be completed in June 2025.

The operator noted the previous penalties in AUSTRAC proceedings in the gaming sector and stated that while the outcome of the civil penalty proceeding against Entain is uncertain, it may result in a penalty being levied which could be “potentially material.”

“We note the allegations made, which we take extremely seriously,” said Entain CEO Gavin Isaacs. “We have co-operated 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. We are committed to keeping financial crime out of gambling and continue to play our part in supporting a well-regulated and compliant sector for our customers, stakeholders and the wider community.”

Link to Originating Application and Concise Statement filed by AUSTRAC.

Shares in Entain plc (LSE:ENT) were trading 5.40 per cent lower at 771.00 pence per share in London following the announcement Monday.