Australia’s financial crime regulator, AUSTRAC, has launched legal proceedings against the online betting giant Entain, the parent company of Ladbrokes, for serious breaches of the country’s anti-money laundering (AML) and counter-terrorism financing (CTF) laws. These violations have raised concerns about the company’s ability to protect its platforms from misuse by criminals.
According to AUSTRAC, Entain’s failure to adequately oversee its AML and CTF programs left the company vulnerable to exploitation via its online betting platforms and third-party cash deposit systems. The regulator claims that Entain did not implement sufficient identity and fund-source checks, particularly for 17 high-risk customers. In some cases, individuals used pseudonyms to conceal their true identities.
The Australian watchdog has stated that Entain’s management failed to act on these critical vulnerabilities, highlighting significant lapses in due diligence and compliance. In response to the legal proceedings, Entain’s CEO, Gavin Isaacs, warned investors that the company could face hefty financial penalties. Under Australia’s AML/CTF Act, fines for such violations can reach up to A$22.2 million (approximately $14.14 million) per infraction.
Isaacs reassured the public, stating that the company had fully cooperated with AUSTRAC’s investigation and was committed to enhancing its AML and CTF measures. Entain has promised to implement additional compliance protocols in accordance with a plan communicated to AUSTRAC back in 2023.
Despite these reassurances, Entain’s stock experienced a 5.5% drop on the London Stock Exchange following the news. This legal action forms part of a broader crackdown by AUSTRAC on money laundering risks within Australia’s gambling industry, which has seen several major players come under scrutiny.
Bet365, another UK-based online gambling firm, is facing a potential penalty as part of an ongoing investigation into suspected illicit financial activities. These regulatory actions come in the wake of a 2022 inquiry into the online gambling sector, which could lead to significant reforms, including possible bans on certain types of advertising and changes to gambling app algorithms.
The regulatory environment is tightening across the gambling industry in Australia, with entities such as Crown Resorts and SkyCity already facing significant penalties. Additionally, litigation against Star Entertainment continues, and other global gambling companies are also being closely monitored.
The legal proceedings against Entain underscore the growing pressure on gambling companies to adhere strictly to AML and CTF regulations, ensuring they are not exploited by bad actors and that their platforms remain secure.
