Sports gambling giants face ‘wake-up call’ as Australian money-laundering investigation nears end

Austrac is finalising its investigation into suspected breaches of money-laundering laws by sports gambling companies Sportsbet, Ladbrokes and Bet365. Photograph: Vince Caligiuri/Getty Images

Australia’s biggest sports gambling companies should be prepared for a “wake-up call” as the financial crime watchdog finalises its investigation into suspected breaches of money-laundering laws.

Any action by the Australian Transaction Reports and Analysis Centre (Austrac) – which began its investigation into Sportsbet, Ladbrokes and Bet365 in late 2022 – could influence the federal government’s plans to regulate the industry amid calls for a total ban on gambling ads.

An Austrac spokesperson confirmed it had received independent audits of suspected non-compliance and was now “assessing whether any further regulatory action may be required”. The investigation was launched after “an extensive supervisory campaign”.

Dr Jamie Ferrill, an expert on financial crimes at Charles Sturt University, said money laundering was “absolutely a significant concern in the online gambling industry” and that companies should be prepared for possible regulatory action.

“It will likely shine a spotlight on some of the weaknesses or loopholes in their AML/CTF (anti-money-laundering and counter-terrorism financing) programs and perhaps other areas of their operations,” Ferrill said. “It will likely result in initial increased costs to improve their programs and clamp down on illicit activity – but that needs to be the cost of doing business.”

Betting companies are required to assess customers and monitor their financial transactions in order to identify, mitigate and manage the risk that they might be engaging in money laundering or terrorism financing. Companies are also required to engage in regular reporting of any identified risks.

Anton Moiseienko, a money-laundering expert at the Australian National University, researched the online gambling industry while at the Royal United Services Institute in the UK. His report did not focus on Sportsbet, Ladbrokes or Bet365, but found other companies had failed to comply with “elementary” obligations.

“We’re not talking about controls being defeated by some sophisticated attempts at money laundering,” Moiseienko said.

He said online gambling provided some criminals with an opportunity to transform the proceeds of crime into legitimate winnings, or to use stolen credit card details.

“The failings in that context are pretty basic most of the time,” Moiseienko said.

Last year, Austrac launched a second specialist unit in response to the increasing threat of money laundering within the gambling industry, which insiders acknowledge is “a high risk”.

Ferrill did not speculate on the outcome of Austrac’s investigation but said it would “hopefully serve as a wake-up call for the industry” that leads to an increased focus on money laundering

“There is a huge amount of legitimate money flowing through the industry, which makes it an attractive target to commingle illicitly obtained funds, or dirty money, for the purpose of ‘cleaning’ it,” she said.

When Austrac’s investigation was launched, its former chief executive Nicole Rose said it was “putting the whole industry on notice to lift their game”.

“Ultimately, enforcing non-compliance is about protecting the community,” Rose said. “Money laundering feeds organised crime and all the harm that comes with it. We need businesses at the frontline to fully comply with [the Anti-Money Laundering and Counter-Terrorism Financing] Act – to understand and mitigate their risks and report suspected crimes.”

Sportsbet, Bet365 and Ladbroke’s parent company, Entain, were contacted for comment. They have previously told Guardian Australia they were working cooperatively with Austrac and took their responsibilities under the anti-money-laundering laws seriously. They also said they had improved their processes.

In 2017, Austrac fined Tabcorp a record $45m for failing to report more than 100 suspicious activities that might relate to money laundering or credit card fraud. It was widely reported as the highest civil penalty issued in Australian corporate history at the time. Tabcorp admitted that its processes and oversight were insufficient.