Neds, Ladbrokes owner faces fight with money-laundering watchdog

Australia’s financial watchdog has commenced proceedings against Entain, the global sports betting group behind local brands Ladbrokes and Neds, alleging serious and systemic non-compliance with the nation’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

It is the first time AUSTRAC has launched civil proceedings against any of Australia’s sports betting groups following the launch of an investigation last year.

AUSTRAC has commenced civil proceedings against the Neds owner, Entain. Credit: Getty Images

“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,” AUSTRAC chief executive Brendan Thomas said.

AUSTRAC alleges Entain’s board and senior management did not have appropriate oversight of its AML/CTF program. It said 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.

The financial watchdog also alleges that Entain failed to conduct appropriate checks on 17 higher risk customers and “deliberately obscured the identity of some high-risk customers, on its own systems, through the use of pseudonyms to ‘protect their privacy’“.

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

Entain chief executive Gavin Isaacs acknowledged the action by AUSTRAC.

“We note the allegations made, which we take extremely seriously,” he said.

“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.”

AUSTRAC’s Thomas said it is the first time it has brought civil penalty proceedings against businesses operating in the online betting sector, but it has also commenced an investigation into bet365 over compliance concerns.

The regulator’s case also alleged that because Entain operated a 24/7 business through its website and app, there was a risk that people “unknown to Entain could access and use Entain’s betting platform including through third-party providers”.

AUSTRAC, which has previously secured the biggest corporate penalties in Australian history in cases against banks, has in recent years turned its sights on the gambling industry.

Bet365 and Sportsbet, the biggest bookmaker in Australia, were told to appoint external auditors to assess their compliance with the anti-money laundering and counter-terrorism financing laws as part of a separate direction from AUSTRAC in 2022.

The regulator also issued rival gambling giant Tabcorp a $45 million penalty in 2017 after a similar investigation, which exposed 108 contraventions of the anti-money laundering and counter-terrorism financing laws over a five-year period.

A risk assessment launched by AUSTRAC this year also underlined that online betting agencies were highly exposed to money-laundering risks.

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