The parent company of Australian online betting majors Ladbrokes and Neds, London Stock Exchange-listed Entain plc, is under yet another regulatory investigation amid claims by the Australian Transaction Reports and Analysis Centre (AUSTRAC) that it has systemically and repeatedly failed to meet anti-money laundering (AML) regulations. AUSTRAC has initiated legal action against Entain, backed by a 640-page report that outlines the alleged offences. The recent court filings have laid bare the first comprehensive description of the specific failures that AUSTRAC claims occurred in Entain’s Australian business.
AUSTRAC’s claims in detail: Blind eye to dirty money
AUSTRAC’s accusations, as laid out in the Australian Financial Review reports, portray a picture of Entain not applying sufficient checks on its high-roller clients and neglecting its due diligence obligations. The court documents outline individual cases in which Entain stands accused of blindsiding suspicious financial transactions.
One particular concern is that one customer had wagered more than $1 million in a single year, despite the fact that Entain had allegedly been aware that an internationally wanted criminal, who was under suspicion of drug trafficking, had placed money into this customer’s bank account.
The other case cited in the filings is that of a gambler who had wagered more than $20 million with Entain’s sites from 2015 to 2022. The gambler, who was unemployed, was under suspicion of being a drug dealer but was wrongly assumed by Entain to be the owner of car yards. The cases point to the purported inability of Entain to effectively scrutinise the source of funds and financial profiles of its high-rollers.
Further information in the court documents introduces a customer named Customer 13, who paid more than $4.2 million into two Entain accounts between 2015 and 2022. AUSTRAC argues that by 2019, Entain should have had reason to be suspicious of this customer’s money. In 2019, Customer 13 provided a bank statement showing a payment of $150,000 for a “granny flat.” The individual who made this payment was on an international arrest warrant, wanted for serious drug crimes and dealing in a Southeast Asian country.
In spite of this obvious red flag, Customer 13’s gambling activity only intensified, with monthly deposits amounting to almost $69,000 by 2019 and jumping to $94,000 in the next year, with a total of $1.1 million in 12 months.
Management oversight and missed warnings
The filings also point towards the case of Customer 15, in which AUSTRAC alleges Entain Australia chief executive Dean Shannon himself examined the account. Even though the customer was placing unusually large payments from offshore accounts, Shannon is said to have assessed the customer as “very low-risk” based on their decade-long wagering history and publicly available data regarding their wealth, with no further seeming verification.
This case questions the depth of Entain’s risk assessment procedures, even when handling substantial financial activity from abroad.
Customer 7 is another example, with the customer having wagered $20.2 million from 2015 to 2022 through Ladbrokes and Neds accounts. AUSTRAC claims that even though Customer 7 had the name of a convicted drug trafficker and suspicious deposit and withdrawal activity since July 2016, Entain did not conduct adequate checks until August 2021. Complicating the matter further, an Entain staff member purportedly suggested in May 2018 that Customer 7 owned two Sydney car yards, information that was never confirmed and later contradicted by the customer himself, who stated that he was a car salesman but presently unemployed and did not own any car yards.
By August 2021, when the investigations began, AUSTRAC was aware that Customer 7 was lodging cash and unemployment payments into their accounts. While the Ladbrokes account was shut down the following month, the Neds account was not closed until October 2022.
The court papers also unmasked details on Customer 1, who allegedly had an adverse media history and was convicted of robbery and belonged to a criminal gang attempting to recover money from the sale of drugs. AUSTRAC states that this information was available to Entain from 2008, including facts about the customer’s seven-year jail sentence.
However, the employee handling Customer 1 allegedly asked Entain’s AML compliance officer to refrain from going near the client, as it would “upset” them, and pointed out that they were a “great client” for the company.
Last, Customer 17 is referenced for betting $30.8 million with Ladbrokes over a five-year period, at one point putting down $1 million in a month. When asked where the money came from, Customer 17 made reference to having made some profitable “speculative investments” that were never verified. When asked for the name of the company sold, the answer was that it was “private”.
A pattern of systemic failures
Entain eventually closed these accounts last year after concluding that the customer’s wealth did not justify their gambling. These specific examples referenced in the report give flesh to AUSTRAC’s overarching assertions that Entain failed to conduct sufficient checks on 17 high-risk consumers, who had spent over $152 million. The agency contends this lack of due diligence and monitoring by Entain’s senior management and board resulted in “serious and systemic non-compliance … over many years”.
On top of this, AUSTRAC blames Entain for allowing patrons to open accounts under pseudonyms, allegedly in order to “protect their privacy,” which further hindered the potential for tracing and tracking suspicious activity. Also under scrutiny is the conduct of business development managers, who were supposedly paid on commission for the losses incurred by their big-spending clients. There are allegations that they discouraged compliance checks so as not to deter these lucrative patrons.
Past accusations against Entain
The current lawsuit is not Entain’s first regulatory run-in in Australia. AUSTRAC initially revealed that it was investigating the company in September 2022. The probe followed an extensive supervisory campaign that scrutinised several entities in the corporate bookmakers’ market, indicating a broader regulatory focus on the sector.
AUSTRAC Chief Executive Officer Nicole Rose then said that all reporting entities, including those in the corporate bookmakers sector, must take their role in combating serious and organised crime seriously and have adequate processes in place to manage the risks of money laundering and terrorism financing. To compound Entain’s AML woes, the firm settled a $29 million fine in the United Kingdom in 2022 for breaching AML and social responsibility rules.
Later in December 2024, AUSTRAC initiated an enforcement investigation, focusing particularly on Entain’s management for its alleged failure to effectively monitor its anti-money laundering (AML) and counter-terrorist finance programs.
Systemic compliance failures
AUSTRAC had already alleged that Entain did not have the controls in place to adequately identify customers and was not taking suitable checks on those individuals who had been flagged as high-risk. Those previous allegations formed the basis of the current, more targeted action, implying a step-by-step build-up of evidence and regulatory suspicion against Entain’s AML controls.
Additionally, in March 2023, the Entain brand Ladbrokes Australia was fined AUD $76,000 for servicing a scam player. This previous fine, although less extensive in nature than the current allegations indicate, further demonstrates a track record of compliance problems in Entain’s Australian business. While Entain has not been accused of direct participation in criminal activity, AUSTRAC believes that the company failed to perform the required due diligence to a satisfactory standard, thereby allowing potential instances of money laundering to occur.
AUSTRAC’s report also mentions the so-called failure to have adequate systems and controls within Entain’s business. This includes the lack of proper transaction limits and procedures for managing international deposits and withdrawals, which are essential for handling money laundering risks.
In addition, the regulator bemoans the wide discretion afforded to exempt customers from regular AML procedures, with insufficient guidance or criteria on when and how to query, investigate, or report a customer’s source of funds or wealth. Insufficient routine procedures and oversight in this area could potentially have exposed Entain to serious weaknesses in its AML controls.
The report also argues that Entain’s transaction monitoring software was not complete and could not successfully identify unusual or suspicious transactions, especially those that were in cash, high deposits, or customers betting from nations on the company’s restricted jurisdiction list.
Entain’s response and stance
Entain released a public statement corroborating AUSTRAC’s claims and informing that it will cooperate with the investigation to the fullest. Entain’s Interim Chief Executive, Stella David, stated that the company was taking these claims very seriously and was continuing to cooperate fully with AUSTRAC. Likewise, the then CEO when the investigation started, Gavin Isaacs, also released a similar statement where he informed that Entain was taking the claims very seriously. AUSTRAC’s track record of action against gambling operators
AUSTRAC has a track record of coming down hard on gambling operators found to be in violation of AML law. In 2015, it fined Tabcorp $45 million for processing dirty money, showing AUSTRAC’s readiness to punish even long-standing players in the betting sector. More recently, the agency has sought even higher penalties from others in the financial and gambling sectors.
Westpac, for example, was slapped with a whopping $1.3 billion penalty for anti-money laundering violations, and Commonwealth Bank was fined $700 million for the same shortfall.
In the casino industry, AUSTRAC has also shown a tough line. Crown was fined AU$450 million in 2023 for systemic failures in anti-money laundering, and SkyCity was made to pay an AU$67 million penalty for violations of the AML/CTF Act. AUSTRAC’s previous enforcement activity against other Australian gambling providers is a stark reminder of the regulator’s determination to encourage compliance and sanction failure. The action against Entain will be watched closely by industry stakeholders and regulators globally, given the significance it has for demonstrating the imperative necessity for robust AML/CTF compliance as a way of maintaining the integrity of the online gambling sector.
