Austrac Takes Legal Action Against Entain for AML and CTF Breaches
Austrac has launched civil penalty proceedings against Entain, accusing the operator of widespread failures to comply with Australia’s anti-money laundering (AML) and counter-terrorism financing (CTF) laws. This marks the first time Austrac has taken legal action against an online betting business in Australia. Entain, which operates Ladbrokes and Neds in the country, acknowledges the potential for a substantial penalty.
Allegations Against Entain
Austrac began its investigation into Entain in September 2022, uncovering what it described as “serious and systematic” lapses in the company’s AML and CTF safeguards. Key findings include:
- Insufficient Oversight: Entain’s board and senior management reportedly failed to adequately oversee its compliance processes, leaving the company vulnerable to exploitation by criminals.
- Unverified Cash Transactions: Third parties were allegedly allowed to deposit cash into betting accounts on behalf of customers, with no proper verification of their identities or the source of the funds.
- Lack of Controls on Higher-Risk Customers: Entain reportedly did not conduct adequate checks on 17 higher-risk customers, increasing the likelihood of misuse by those seeking to launder the proceeds of crime.
- Use of Pseudonyms: Some customers were allegedly allowed to use pseudonyms, obscuring their true identities under the guise of privacy protection.
Austrac further criticised Entain’s 24/7 online operations, claiming they increased the risk of unidentified individuals accessing and using its betting platform.
Austrac’s Statement
Austrac CEO Brendan Thomas emphasised the gravity of the allegations, pointing to Entain’s global prominence in sports betting and gaming.
“We allege that Entain failed to develop and maintain a compliant anti-money laundering program, leaving it at serious risk of criminal exploitation,” Thomas said.
Thomas added that money laundering is often associated with serious criminal activities such as fraud, scams, and corruption, which have widespread societal impacts.
Federal Court Proceedings
The Federal Court of Australia will determine whether Entain has breached the AML/CTF Act and decide on any resulting penalties. While Austrac has refrained from further comment, Entain has acknowledged the seriousness of the allegations.
In a statement, Entain noted that it has been cooperating with Austrac since the investigation began. The company has also implemented a program to improve its AML and CTF measures, with final changes expected by June 2025.
“We are committed to keeping financial crime out of gambling and supporting a compliant sector,” said Entain CEO Gavin Isaacs.
Broader Crackdown on the Gambling Industry
Austrac’s action against Entain is part of a broader regulatory crackdown on AML and CTF compliance failures across Australia’s gambling sector:
- SkyCity Entertainment Group: Paid AU$67 million in penalties over failings at its Adelaide casino.
- Star Entertainment Group: Faces ongoing Federal Court proceedings over AML-related issues, risking the loss of state licences.
- Crown Resorts: Ordered to pay AU$450 million in penalties following investigations into its Melbourne and Perth casinos.
In the online betting sector, Austrac has recently targeted SportsBet and Bet365 for similar breaches, with investigations and remedial actions ongoing.
Potential Implications
If the Federal Court rules against Entain, the financial penalty could be substantial, with previous fines in the gambling industry reaching hundreds of millions of dollars. This case underscores Austrac’s heightened scrutiny of AML and CTF practices across both land-based and online gambling operators.
