The management of gambling giant Tabcorp should have done more to ensure the company was meeting its anti-money laundering and counter-terrorism financing obligations, a Federal Court judge has said.
Justice Nye Perram on Friday provided his reasons for fining Tabcorp $45 million in March over breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act between July 2010 and December 2015.
Tabcorp has admitted it did not inform Austrac on all occasions on which it was suspicious of illegal betting activity.Credit: Jessica Shapiro
Australia's financial intelligence unit, Austrac, took action against Tabcorp in 2015, but the parties reached agreement on a fine in February 2017.
Tabcorp has admitted it did not inform Austrac on all occasions on which it was suspicious of illegal betting activity.
"The contraventions did not arise as a result of a deliberate intention to contravene the act," Justice Perram said.
Instead, the judge said, the state of affairs that had prevailed under Tabcorp's anti-money laundering and counter-terrorism financing program "came about because of insufficient resourcing together with insufficient processes for consistent management oversight, assurance and operational execution".
"Management should have done more," Justice Perram said.
Justice Perram said the Tabcorp board and senior management did receive compliance reports during the relevant period but were not aware of the deficiencies and were not involved in the contraventions.
The judge said since the breaches came to light, Tabcorp had made a substantial investment in improving its compliance arrangements.
Justice Perram said one of the breaches, the failure of Tabcorp subsidiary TAB Ltd to enrol in time as a reporting entity with Austrac, arose from a misunderstanding.
TAB had wrongly believed that it could report to Austrac through its parent, Tabcorp.
Even though the breach might appear minor, Justice Perram said it was important to impose a substantial penalty - for this breach $500,000 - so it became known that even minor breaches of the act had very serious consequences.
Justice Perram said Tabcorp's failure to report 52 instances of credit betting to Austrac, even though the company did refer the matters to state regulators, could have incurred a maximum penalty of $578 million.
But the judge accepted the parties' submission that the court should treat the conduct as a single course of conduct because the same factual matter underpinned all 52 contraventions.
Those breaches cost Tabcorp $10 million because, said Justice Perram, even though no particular harm seemed to have flowed from it, the misunderstanding that had occurred was a serious one.
Justice Perram fined Tabcorp $15 million for failing to report 51 suspected examples of credit card fraud to Austrac even though reports of transactions were made to the NSW Police.
Justice Perram said the breaches in this area fell into four distinct tranches, which would suggest a maximum penalty of $68 million, but that would be significantly excessive.
The Austrac action against Tabcorp was the first brought under the act.
Austrac has also launched action against the Commonwealth Bank, alleging it had breached its anti money-laundering and counter-terrorism financing obligations.
AAP