AUSTRAC Imposes Penalty on Entain Group for Breaching AML Regulations in Australia

On 16 December 2024, AUSTRAC imposed civil penalty proceedings on Entain Group Pty Ltd,  which operates online betting sites including Ladbrokes, Neds and other online betting brands.

The proceedings allege Entain of serious and systematic non-compliance with Australia’s AML/CTF laws.

Entain Group – A Global Gambling and Gaming Leader

Entain plc has a headquarter in the UK, an FTSE 100 constituent, and is the world’s largest gaming group and sports betting company. This group also includes technology and expands its services to third-party customers on a B2B basis & B2C operations.

Entain provides technological capabilities, infrastructure, games, and products developed by in-house gaming studios to support BetMGM. It’s a famous player in the U.S. sports iGaming & betting market.

Entain is the global operator of regulated markets and has an online and physical presence in approximately 30 territories. Not to forget, it’s a member of the Dow Jones Sustainability Index (DJSI) and FTSE4Good Index and has an AA rating from MSCI.

4 Reasons Why Entain Group is in Red Light 

AUSTRAC’s allegation against the Entain Group is based on the following AML/CTF failures:

1. Entains’s board of senior management could not keep appropriate oversight of its AML/CTF program, which in turn interfered with the ability to identify money laundering-related exploitation of their betting sites.
2. Entain operates 24/7 via websites and apps, which are already vulnerable to exploitation. It further worsened when unknown people, including third-party providers, were able to access and use Entain’s platform.
3. Even worse? Third parties could accept cash and other deposits on behalf of Entain to be credited into betting accounts in ways that fade out the proceeds of the crime.
4. The company did not have appropriate measures in place to confirm the identity of customers making deposits, nor the measure to confirm the source of the money.
5. Entain failed to conduct a proper check on 17 high-risk individuals and was indifferent to the fact that their online betting sites are being exploited by criminals to spend the proceeds of serious crimes.

Note: AUSTRAC also mentioned that “ This 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”.

Shares of Entain dropped by 5.5% in early trading, which coincided with the existing crackdown by Australian authorities on the gambling sector.

In response to alleged AML/CFT failures highlighted by AUSTRAC, Entertain’s CEO Gavin Issacs warned investors of a potentially hefty penalty from legal proceedings. 

Violations can result in fines of up to A$22.2 million ($14.14 million) per infraction under Australia’s AML/CTF Act.

According to press release, this case is just an example of rising money laundering activities in the gambling industry in Australia. It shows the importance of strengthening AML/CFT measures. Following this case, AUSTRAC also imposed penalties on different companies for breaching the AML/CFT Act, including a $63 million penalty on Sky City and $450 million on Crown.

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What does the future look like for Entain? 

The FTSE 100 stock index declined by 0.5%. However, Entain experienced a significant drop of 6.3% after Australia’s financial crime department initiated legal proceedings and announced that Entain’s online betting platform breached the region’s AML/CFT laws.