Bookie gets audited to ensure compliance

Aussies are the biggest punters per head of population in the world, and when placing money on unknown outcomes is done with such frequency and the losses so significant, the construct of that regulated environment must be monitored in partnership with the market markers and regulators through the same lens.

The process of regulation is not just about monitoring and identifying the legitimacy of the bet that punters place, but ensuring the wagering system's compliance restricts criminal infiltration. It's about how and why a betting account is used when considering the potential for money laundering.

In May 2024, the Australian Transaction Reports and Analysis Centre (AUSTRAC) accepted an enforceable undertaking (EU) from Sportsbet Pty Ltd following a supervisory review of the company’s anti-money-laundering and counter-terrorism-financing (AML/CTF) compliance arrangements.

AUSTRAC stated that the enforceable undertaking was accepted to address compliance issues identified during its supervisory engagement with the company.

No civil penalty proceedings were commenced at that time. The enforceable undertaking places Sportsbet under ongoing regulatory obligations until AUSTRAC is satisfied that remediation has been completed in accordance with the undertaking.

The matter provides an example of AUSTRAC’s use of enforceable undertakings in relation to large gambling operators regulated as reporting entities under the AML/CTF Act 2006 (Cth).

Background

Sportsbet is an online wagering service provider operating in Australia and is a reporting entity for the purposes of the AML/CTF Act.

AUSTRAC conducted supervisory activity in relation to Sportsbet as part of its regulatory oversight of reporting entities in the wagering sector. AUSTRAC publicly stated that, following this engagement, it required Sportsbet to enter into an enforceable undertaking to remediate aspects of its AML/CTF compliance.

By May 2024, AUSTRAC determined that the acceptance of an enforceable undertaking was an appropriate regulatory response. AUSTRAC’s public statements indicate that the undertaking was intended to ensure remediation occurs within agreed timeframes and under regulatory supervision.

The Enforceable Undertaking

The enforceable undertaking accepted by AUSTRAC in May 2024 imposes binding obligations on Sportsbet. According to AUSTRAC’s public statement, these include:

• Appointment of an external auditor, approved by AUSTRAC, to conduct an independent assessment of Sportsbet’s AML/CTF compliance

• Development and implementation of a remediation action plan addressing issues identified through AUSTRAC’s supervisory engagement

• Regular reporting to AUSTRAC on the progress of remediation activities

• Implementation of remedial measures within agreed timeframes

The undertaking remains in force until AUSTRAC is satisfied that Sportsbet has complied with all obligations under the EU.

Findings and Compliance obligations

AUSTRAC’s public materials confirm that the enforceable undertaking followed supervisory engagement concerning Sportsbet’s compliance with AML/CTF obligations. However, AUSTRAC did not publish a detailed list of specific deficiencies identified during the review.

AUSTRAC did not publicly characterise the conduct as deliberate or intentional non-compliance. Its statements focus on the need for remediation and compliance uplift rather than enforcement through penalty proceedings.

Independent Review Obligations

AUSTRAC confirmed that the enforceable undertaking requires Sportsbet to appoint an external auditor to conduct an independent assessment of its AML/CTF compliance.

This requirement aligns with AUSTRAC’s regulatory powers to require independent testing of AML/CTF programs as part of remedial action under an enforceable undertaking.

Legal Considerations

The supervisory engagement and enforceable undertaking operate within the statutory framework of the AML/CTF Act and associated AML/CTF Rules. AUSTRAC’s regulatory oversight is directed to ensuring that reporting entities meet their obligations under Commonwealth AML/CTF legislation.

AUSTRAC retains the power to take further enforcement action, including civil penalty proceedings, if a reporting entity fails to comply with an enforceable undertaking.

Outcome

Sportsbet remains subject to the enforceable undertaking accepted in May 2024. As at the time of AUSTRAC’s public reporting, no civil penalties have been imposed.

AUSTRAC’s enforcement listings identify the enforceable undertaking as ongoing, with compliance monitored by the regulator.

“We take our responsibility to mitigate the risks of financial crime to the Australian financial and payments networks extremely seriousl[y],” a spokesperson for Sportsbet said. “We are grateful AUSTRAC has acknowledged our efforts to improve our compliance and that our transformation program to further strengthen our compliance with the AML/CTF Act is well underway.”

Professional Significance

This matter illustrates AUSTRAC’s use of enforceable undertakings as a regulatory mechanism for addressing AML/CTF compliance issues in the wagering sector. It reflects the regulator’s capacity to require structured remediation and independent review without commencing immediate penalty litigation.

For reporting entities, the Sportsbet enforceable undertaking highlights the ongoing supervisory role of AUSTRAC and the consequences of identified compliance issues under the AML/CTF regime.

Authored by Campbell Dore

Publisher

The Brief

campbell@thebrieflaw.com.au