Australia begins probe into Bet365’s compliance with anti-money laundering laws

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has announced that it will commence a formal investigation into whether British gambling giant Bbet365 has profited from the proceeds of crime, following an extensive audit.

This move marks the second major international bookmaker that the financial crime regulator has scrutinized in the past two years, with rival Entain, operator of Neds and Ladbrokes, still awaiting the outcome of a separate investigation into potential breaches of anti-money laundering and counter-terrorism practices.

Should AUSTRAC uncover evidence of inadequate compliance systems or facilitation of criminal activities, Bet365 could face substantial fines and stringent regulatory measures.

Corporate bookmakers must have robust systems in place to ensure they can manage and mitigate risks associated with money laundering and terrorism financing,” AUSTRAC chief executive Brendan Thomas said, as reported by Australian Financial Review. “Businesses without adequate processes in place to manage those risks leave themselves vulnerable to exploitation by criminals.”

The probe into Bet365 and local rival Sportsbet commenced following suspicions of illicit funds in 2022. AUSTRAC had appointed two external auditors to review the activities of foreign-owned betting establishments and submit their reports within 180 days. Bet365 engaged KPMG for its investigation, while Sportsbet’s audit was overseen by KordaMentha.

Meanwhile, the outcome of an enforcement investigation into Entain, initiated after the company paid an AUD 29 million ($19.2 million) fine to the UK Gambling Commission, remains undisclosed. AUSTRAC has not commented publicly on the audit of Sportsbet.

AUSTRAC has a history of penalizing companies for severe breaches, issuing over AUD 2 billion ($1.3 billion) in fines since 2015. Notable fines include AUD 45 million to Tabcorp and AUD 1.3 billion and AUD 700 million to Westpac and Commonwealth Bank, respectively, for violating anti-money laundering laws.

For Bet365 and its competitors, weak compliance systems could further strain already tight margins and complicate operations in the face of proposed regulatory changes. Communications Minister Michelle Rowland is considering recommendations from an online gambling inquiry, which may include blanket bans on advertising and sponsorships, and adjustments to gambling app algorithms.

Proposed laws banning credit card deposits for sports betting, alongside increased point-of-consumption taxes in Queensland and Victoria, and potential tax hikes in New South Wales, add further pressure on the sector.

The maximum penalty for a single breach of anti-money laundering and counter-terrorism laws stands at AUD 22.2 million.