Australia’s financial intelligence agency has taken gambling giant Entain to the federal court, alleging it “deliberately obscured the identities” of high risk customers and failed to stop a “serious risk of criminal exploitation”.

The Australian Transaction Reports and Analysis Centre’s (Austrac) civil penalty proceedings allege that Entain, which runs the Ladbrokes and Neds betting brands, committed “serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws”.

In a statement, Austrac alleged Entain did not conduct appropriate checks on 17 higher risk customers and “did not appropriately deal with the risk that its online betting sites were being exploited by criminals to spend the proceeds of serious crime”.

“This includes allegations that Entain deliberately obscured the identity of some high risk customers, on its own systems, through the use of pseudonyms to ‘protect their privacy’,” the agency said in a statement.

Austrac alleges third parties, including businesses and individuals, accepted cash on behalf of the bookmaker to be credited into accounts “in ways that could obscure the proceeds of crime”.

The Austrac CEO, Brendan Thomas, said the court proceedings would allege Entain “did not develop and maintain a compliant anti-money laundering program and failed to identify and assess the risks it faced”.

“We are alleging this left the company at serious risk of criminal exploitation,” Thomas said in a statement.

The chief executive of Entain, Gavin Isaacs, said “we note the allegations made, which we take extremely seriously”.

“We have cooperated fully with Austrac throughout its investigation and we are implementing further enhancements to Entain Australia’s anti-money laundering and counter-terrorism compliance arrangements,” Isaacs said.

“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.”

Austrac also alleged Entain’s board and senior management did not have appropriate oversight of its anti-money laundering and counter-terrorism financing program, which increased the company’s vulnerability to potential criminal exploitation.

“Entain operated a 24/7 business through its website and app, which created risks that persons unknown to Entain could access and use Entain’s betting platform including through third party providers,” the Austrac statement said.

“Entain did not have appropriate controls to confirm the identity of customers making these deposits and the source of this money.”

This is the first time Austrac has launched civil proceedings against an online bookmaker in Australia. The Australian arm of Entain is part of one of the world’s largest sports gambling organisations.

“The online betting sector, and all other businesses regulated by Austrac, must take their anti-money laundering and counter-terrorism financing obligations seriously,” Thomas said.

“This includes ensuring they have appropriate procedures to know who their customer is, even when they rely on third parties to process transactions.”

The law requires betting companies 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.

In late 2022, Austrac launched an enforcement investigation into Entain after an “extensive supervisory campaign” related to suspected breaches of anti-money laundering laws.