Shares in Ladbrokes owner Entain slump on money laundering investigation
Entain shares fell nearly seven per cent this morning after the gambling giant was sued by Australian authorities over a failure to comply with anti-money laundering rules.
The Australian Transaction Reports and Analysis Centre (Austrac) said on Monday that Entain’s Australian subsidiary failed to properly identify anti-money laundering risks in its first proceedings against an online betting company.
According to Austrac, Entain created risks that its platform could be used by individuals unknown to the company and failed to assess 17 high-risk customers.
It said Entain “deliberately obscured the identity of some high risk customers, on its own systems, through the use of pseudonyms to ‘protect their privacy’.”
The group said the outcome of the legal proceedings could be “potentially material”. Its share price has fallen by 6.75 per cent this morning.
“A company would never want the words ‘money laundering’ anywhere near it and that’s why news from gambling outfit Entain is potentially damaging,” Russ Mould, investment director at AJ Bell said.
“The Ladbrokes owner is being taken to court by the Australian regulator, significantly the first time it has launched civil proceedings against an online betting company, over serious non-compliance with the country’s money laundering and anti-terrorism financing laws.
“An Australian crackdown has seen other operators pay out material sums in fines and Entain faces a nervous wait to find what, if any, damage will be done to the balance sheet and its reputation by any eventual judgement.
“This issue could hang over the business for some time to come as proceedings at Australia’s federal court could take a good while to reach a conclusion.”
Entain has been struggling with a tricky trading period, during which it has been weighed down by £2bn’s worth of acquisitions and a series of compliance battles, with investors in Turkey lining up for more than £100m in compensation for failing to disclose a high profile bribery case that forced them to pay HM Revenue and Customs almost £600m.
Gavin Isaacs, CEO of Entain, said: “We note the allegations made, which we take extremely seriously.
“We have co-operated fully with AUSTRAC throughout its investigation and we are implementing further enhancements to Entain Australia’s AML and CTF compliance arrangements. Whilst we still have some further improvements to make, we expect these to be implemented in line with the plan we communicated to AUSTRAC in 2023.
“We are committed to keeping financial crime out of gambling and continue to play our part in supporting a well-regulated and compliant sector for our customers, stakeholders and the wider community.”