17 March 2017

Money Laundering

AUSTRAC has announced a $45 million civil penalty against Tabcorp, promoted as "the highest ever civil penalty in corporate Australian history".

The penalty relates tonon-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), with Tabcorp being held to have contravened the AML/CTF Act on 108 occasions over a period of more than five years.

Perram J found that Tabcorp failed to:
  • have a compliant AML/CTF program for over 3 years to manage the risks of money laundering and terrorism financing. 
  • give AUSTRAC reports about suspicious matters on time or at all on 105 occasions. Tabcorp has admitted that these suspicions related to unlawful activity including money laundering and credit card fraud. 
  • Identify a customer who collected $100,000 in winnings. 
  • Enrol with AUSTRAC on time. 
AUSTRAC comments
Tabcorp admitted that it had insufficient processes for consistent management oversight, assurance and operational execution of its AML/CTF program. Its AML/CTF function was under-resourced, and Tabcorp’s senior management did not regularly receive reports in relation to AML/CTF compliance.
In our view, Tabcorp had a corporate culture indifferent to meaningful AML/CTF compliance and risk mitigation until we intervened ... Boards and senior management across all industries should take note to ensure that they are fully informed of their AML/CTF compliance.
 Such contraventions are not to be taken lightly and this unprecedented civil penalty highlights AUSTRAC’s resolve to take enforcement action against reporting entities that engage in significant, extensive and systemic non-compliance.
AUSTRAC indicates that
The financial consequences of the proceedings for Tabcorp will amount to more than $90 million once AUSTRAC’s agreed court costs and Tabcorp’s disclosed defence costs are factored in.
Tabcorp is reported to have agreed to pay the penalty (as 'recognised costs' in its corporate financial statement) on the condition that AUSTRAC withdraws any further allegations of non-compliance, presumably out of concern that derail the $11 billion merger with competitor Tatts Group.

A Tabcorp statement notes
Tabcorp acknowledges that there were a number of deficiencies in its former AML/CTF program, which resulted in a serious contravention of the AML/CTF legislation.