- Australian anti-money laundering investigation
- Entain could face ‘material’ penalty
- Not an isolated event
Gambling and sports betting group Entain (ENT) was rooted at the bottom of the FTSE on Monday (16 Dec) with the shares falling as much a 7% on news the Australian anti-money laundering and counter-terrorism financing regulator has commenced civil proceedings for alleged contraventions.
Having rallied more than 50% since August on better-than-expected trading the shares are back in the doghouse and remain just over a fifth lower on the year.
WHAT DID THE COMPANY SAY?
CEO Gavin Isaacs commented: ‘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 (anti-money laundering) and CTF (counter-terrorism financing) 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.’
The company added that while the level of any financial penalty is a matter for the Federal Court of Australia, it could be ‘potentially material’.
It is not the first time Entain has fallen foul of compliance rules - in 2023 the company agreed to pay £585 million over alleged disclosure failures relating to bribery allegations in its Turkish operations.
EXPERT VIEW
Russ Mould, investment director at AJ Bell, commented: ‘A company would never want the words ‘money laundering’ anywhere near it and that’s why news from gambling outfit Entain is potentially damaging.
‘This doesn’t look to be a one-off incident, with Entain on the block for not conducting appropriate checks on 17 high-risk customers and allegedly helping them obscure their identities.
‘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. This could weigh on recently appointed CEO Gavin Isaacs’ attempts to turn around the business.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
