Australia’s financial crimes watchdog AUSTRAC has commenced civil penalty proceedings in the Federal Court against online gaming giant Entain Group – whose Australian operations include online sportsbooks Labdrokes and Neds – for alleged “serious and systemic non-compliance” with the country’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.
According to information made public on Monday, Entain’s board and senior management did not have appropriate oversight of its AML/CTF program, which limited its ability to identify the risks it faced and its vulnerability to criminal exploitation.
AUSTRAC also says 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 also accepted cash and other deposits on behalf of Entain to be credited into betting accounts in ways that could obscure the proceeds of crime, the watchdog said, stating that cash is less transparent than other forms of money and is at higher risk of being the proceeds of crime.
Entain did not, it added, have appropriate controls to confirm the identity of customers making these deposits and the source of this money.
Entain is also accused of failing to conduct appropriate checks on 17 higher risk customers, including examples where the company 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, explained AUSTRAC, 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”.
“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,” said AUSTRAC CEO Brendan Thomas.
“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.
“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.
“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.”
The action taken against Entain represents the latest by AUSTRAC against Australia’s gambling industry, having last year agreed an AU$450 million settlement with Crown Resorts and earlier this year an AU$67 million penalty with SkyCity over AML/CTF breaches. It also accepted an enforceable undertaking from Sportsbet and is in the midst of a Federal Court case against Star Entertainment Group.
The watchdog noted that it is now a matter for the Federal Court of Australia to determine whether Entain contravened the Act and, if so, what orders to make.
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