HWL Ebsworth Lawyers AML/CTF Regulatory Round Up – May 2025
In this edition of our AML/CTF Regulatory Round Up, we provide:
comments made by AUSTRAC CEO Brendan Thomas on 25 March 2025 (at the Regulating the Game 2025 conference) regarding recent enforcement activity and focuses in relation to the casino and gaming industry;
an update on AUSTRAC’s civil penalty proceeding against Entain Group;
a summary of AUSTRAC’s new investigation powers;
an update on the new tipping off provision which came into effect on 31 March 2025; and
an update on the commencement of the second round of consultation on the AML/CTF Rules.
AUSTRAC CEO Brendan Thomas – Regulating the Game 2025
On 25 March 2025, AUSTRAC CEO Brendan Thomas spoke at the Regulating the Game 2025 gambling law and regulation conference.
Speaking of AUSTRAC’s recent enforcement action against several of the major Australian casinos, Mr Thomas stated:
“In several cases, we’ve seen clear examples of boards and executives turning a blind eye to crime for the benefit of profit. A key failure that we have observed is when boards take a ‘tick and flick’ approach to their AML responsibilities. In these situations we have seen cultural failures where the important questions are just not asked, or the questions that are asked are not sufficiently robust.”
In addition to governance failings, Mr Thomas commented on the limitations of outsourcing and using template AML programs highlighting that whilst a reporting entity can use outsourcing and templates, the entity must ensure the program is tailored to its business and reflect its systems and controls. Mr Thomas stated:
‘[e]ach business needs a tailored approach to compliance based on individual systems and processes and the only way [a reporting entity] will meet [its] compliance obligations is to have a thorough understanding of how criminal activity can infiltrate [its] specific business’.
Speaking about AUSTRAC’s future plans, Mr Thomas stated the gambling sector is still a focus industry for 2025, including online gambling and ‘scambling’ (scam gambling websites).
Update on AUSTRAC’s civil penalty proceeding against Entain Group
On 16 December 2024, AUSTRAC commenced a proceeding against Entain Group Pty Ltd (Entain) seeking orders for civil penalties in respect of the alleged contravention of s81 and s36 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). Entain operates online betting sites including Ladbrokes and Neds.
This proceeding is the first against a reporting entity operating in the online betting sector. It follows civil penalty proceedings brought against Australia’s major casinos Crown and SkyCity Adelaide (which have been completed) and The Star (which is ongoing).
In this proceeding, AUSTRAC alleges (among other things):
Entain’s board and senior management did not have appropriate oversight of its AML/CTF program;
Entain facilitated the provision of designated services 24 hours a day, 7 days a week, through non-face-to-face channels via its website and/or app, creating risks that persons unknown to Entain could access and use its betting platform;
Entain failed to adopt and maintain an AML/CTF Program as required, including on the basis that it:
failed to comprehensively identify or assess inherent ML/TF risks;
failed to include appropriate risk-based systems, controls and procedures to mitigate and manage all inherent ML/TF risks it reasonably faced;
failed to appropriately risk rate customers;
had inadequate source of wealth/source of funds procedures;
had a deficient transaction monitoring program;
had deficient systems and controls to ensure suspicious matter reporting; and
Entain failed to undertake ongoing customer due diligence as required in respect of 17 particular high-risk customers.
On 31 March 2025, AUSTRAC filed a Statement of Claim setting out its allegations against Entain and the basis for its claim for civil penalty orders in detail. The Statement of Claim comprises more than 600 pages.
The Court has ordered that the parties attend mediation before 4 August 2025 and, absent a resolution, Entain file a defence by 12 September 2025.
AUSTRAC’s new investigation powers
On 7 January 2025, changes to strengthen AUSTRAC’s investigative powers came into effect. The changes give AUSTRAC a new examination power and enhance its powers to compel the production of information and documents.
Examinations
Pursuant to the new s172A of the Act, AUSTRAC has the power to require a person, by written notice, to appear before an examiner and answer questions under oath regarding information or documents that are relevant to compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Act). AUSTRAC did not previously have a power to examine individuals.
AUSTRAC’s new examination powers require that the examination must take place in private, and any person who is the subject of an examination by AUSTRAC is entitled to have a lawyer present during the examination and to have the examination recorded.
Production of information and documents
The power for AUSTRAC to issue notices under s167 of the Act has been expanded. AUSTRAC now has the power to issue compulsory notices to anyone who it reasonably believes has information or documents that are relevant to compliance with or enforcement of an offence or civil penalty provision under the Act. Prior to these changes coming into effect, AUSTRAC only had the power to issue s167 notices to reporting entities or their employees or officers.
In addition, AUSTRAC now also has the power under s49B of the Act to compel the production of information and documents where it believes a person has information or a document that may assist AUSTRAC with obtaining or analysing information to support efforts to combat money laundering, terrorism financing, proliferation financing or other serious crimes or identifying trends, patterns, threats or vulnerabilities associated with money laundering, terrorism financing, proliferation financing or other serious crimes (Investigation Efforts). Unlike the power in s167 of the Act, s49B enables AUSTRAC to compel production of information and documents which are not necessarily relevant to compliance or enforcement of the Act as long as they may assist AUSTRAC with its Investigation Efforts.
s49C of the Act has also been added to provide safeguards for entities who wish to voluntarily produce information to AUSTRAC. The AUSTRAC CEO has the power to issue an authorisation under the new s49C for the recipient of the notice to produce information or documents to AUSTRAC without breaching any confidentiality obligations that may otherwise apply. A pre-requisite to the exercise of the power is that AUSTRAC must be satisfied the person has information that may assist AUSTRAC with its Investigation Efforts.
The amendments to AUSTRAC’s investigative powers also abrogates (to some extent) the privilege against self-incrimination so that persons may be required to provide documents or information to AUSTRAC, even if in doing so, they may incriminate themselves. Such evidence is not admissible in evidence against the person in civil or criminal proceedings other than specifically defined proceedings relating to money laundering, terrorism financing or proliferation financing such as proceedings under the Act and proceedings under the Proceeds of Crime Act 2002 (Cth) relating to the Act.
Changes to the tipping off offence
On 31 March 2025, changes to the ‘tipping off’ prohibition set out in s123 of the Act, which relates to disclosure of suspicious matter reports, came into effect.
The purpose of the changes is to focus on whether the disclosure of the information would or could reasonably be expected to prejudice a law enforcement investigation, rather than enforcing a strict prohibition on disclosure of the information subject to certain limited exceptions.
The new tipping off framework provides for greater flexibility and protections in disclosing information to law enforcement agencies, other bodies corporate within the same reporting group and third-party service providers (subject to appropriate safeguards and for the purpose of ML/TF risk management). This relaxation of the obligations will also assist reporting entities in the context of a merger or acquisition, or when engaging with consultants to support AML/CTF remediation and uplift projects.
The key consideration that reporting entities and those subject to the tipping off provisions must have in mind is whether the disclosure would or could reasonably be expected to prejudice an investigation by law enforcement agencies.
All reporting entities (including lead reporting entities once the major reforms commence next year) should have requirements set out in their AML/CTF programs which govern the way information can be shared within the reporting group.
As part of developing amended AML/CTF programs which comply with the major reforms (coming into effect in March 2026), reporting entities should ensure that their staff training documents, together with their policies and procedures, including their AML/CTF programs provide for the appropriate sharing of information for ML/TF risk management/mitigation and to ensure that information relating to SMRs is strictly safeguarded.
Second consultation of AML/CTF Rules
AUSTRAC has commenced its second round of consultation on the new Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules). The second exposure draft of the AML/CTF Rules covers a variety of areas including AML/CTF programs, reporting groups, customer due diligence, correspondent banking, disclosure of AUSTRAC information to foreign counterparts, suspicious matter reports and threshold transaction reports among other things. The deadline for submissions is 27 June 2025.
These articles were written by Polat Siva, Partner, Neil Perl, Special Counsel and Rebecca Kelly, Senior Associate.
