Authorities in Australia have begun an enforcement investigation into the local subsidiary of global bookmaker Bet365 over potential breaches of Australian anti-money laundering laws.

On Thursday, March 7, the Australian Transaction Reports and Analysis Centre (AUSTRAC) confirmed the investigation would focus on whether Bet365 had fully complied with Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

This investigation follows the receipt by AUSTRAC of an external audit report on Bet365, a process instigated by the financial crime watchdog in November 2022.

In its role, AUSTRAC scrutinizes banks, casinos, and sports betting operators’ compliance practices to ensure that at no point do they profit from criminal activities.

AUSTRAC CEO Brendan Thomas did not expand on the scope of the investigation, instead highlighting the obligations of the betting industry in Australia in combating financial crime.

“Corporate bookmakers must have robust systems in place to ensure they can manage and mitigate risks associated with money laundering and terrorism financing,” Thomas said. 

“Businesses without adequate processes in place to manage those risks leave themselves vulnerable to exploitation by criminals.”

Opening the Books

AUSTRAC’s investigation of Bet365 follows an extensive campaign of assessment of the Australian sports betting sector, which began in September 2022 with an investigation into Entain for similar AML concerns.

That investigation is still ongoing.

In November 2022, AUSTRAC ordered Bet365 and rival operator SportsBet (a subsidiary of the Flutter Entertainment group) to appoint an AUSTRAC-approved auditor to carry out an external audit of both firms.

The scope of that audit included the adoption of risk-based controls for anti-money laundering and to counter terrorist financing when dealing with customers and associated risks. 

In addition, Sportsbet and Bet365 were audited on whether senior management had effective oversight and frameworks in dealing with these risks, as well as reporting obligations and so-called know your customer (KYC) checks.

Failure to comply with the  Anti-Money Laundering and Counter-Terrorism Financing Act can result in large financial penalties and potentially throw operations open to criminals.

Australian horseracing and bookmaking operator Tabcorp was fined A$45 million for failing to comply with the act in 2017, while more recently in 2023, SkyCity Entertainment group was fined A$45 million over anti-money laundering failings in Australia.

The largest fine, however, was levied in July 2023 when Crown Resorts was issued with a civil penalty of $450 million for what AUSTRAC deemed as “egregious” breaches of anti-money laundering laws. Crown Resorts has been subject to several controversies since, including an internal probe into the CEO.

A Tough Nut to Crack

Australia’s gambling industry is a highly regulated environment, yet there is no overarching regulatory entity or legislation governing the conduct of gambling in the country.

Instead, gambling in Australia is regulated at both the state/territory and federal levels by eight individual states, each with its own regulator.

At the federal level, Australia’s constitution allows the government to regulate things such as telecommunications, money, and trade among the states and territories.

Federal laws affecting the sector include the Interactive Gambling Act (2001), the Financial Transaction Reports Act (1988), and the Anti-Money Laundering and Counter-Terrorism Financing Act (2006).

AUSTRAC has regulatory responsibility in AML and financial transaction reporting, while the Australian Communications and Media Authority (ACMA) monitors and enforces compliance with the Interactive Gambling Act.

The Interactive Gambling Act prohibits online casinos, in-play betting, unlicensed online gambling, online instant lotteries, and gambling by credit.

Similar to AUSTRAC, the ACMA has the power to instigate civil proceedings against operators where breaches are identified.