I welcome today’s highest ever civil penalty in Australian corporate history ordered against Tabcorp by the Federal Court of Australia.

This civil penalty of $45 million sends an unequivocal message to the financial and gambling sector that if you do not take your AML/CTF Act obligations seriously, AUSTRAC will take action.

Justice Perram has found that Tabcorp had contravened the AML/CTF Act on 108 occasions over a period of more than five years. His findings included 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.

Tabcorp had admitted it had insufficient processes for consistent management oversight, assurance and operational execution of the 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.

It was not until AUSTRAC drew the program’s deficiencies to Tabcorp’s attention that it commenced work to revise its AML/CTF program and enhance its associated processes, systems and controls.

There can be no doubt there was a serious failure in corporate governance, and the size of the penalty reflects a significant, extensive and systemic non-compliance.

In my view this non-compliance arose from a corporate culture indifferent to AML/CTF compliance and mitigation of ML/TF risk until we intervened.

Such a culture puts the community at risk by creating opportunities for terrorists to fund attacks against Australian citizens and interests, and for serious and organised crime to divert wealth to the black market and fund other illegal activity such as drug trafficking.

The financial and gambling sectors are the first line of defence in preventing this from happening, and as responsible members of the community, the sector has obligations it must fulfil.

This is why AUSTRAC took action against Tabcorp, because it simply failed in its obligations.

This outcome sends a clear message to boards and senior management across all industries to ensure that they are fully informed of their AML/CTF compliance.

You must ensure that your AML/CTF obligations are properly resourced, and there is appropriate oversight and governance.

I ask you to examine your practices, ask some hard questions about risk and develop a sustainable strategy that serves both your customers and your country.

The response by Tabcorp has been positive. It has taken important steps towards improving its AML/CTF compliance, including better governance measures and oversight by the Board, as well as making substantial investments in time, money and resources.

Importantly, Tabcorp has recognised the value of a positive compliance culture, as the consequences have had an impact on its bottom line and reputation.

As one of the world’s largest publicly listed gambling companies, I see a critical role Tabcorp can play in supporting AUSTRAC’s mission in the future in the global fight against terrorism and organised crime.

I want to thank AUSTRAC’s partners who supported us during this course of action, particularly New South Wales Police, the Victorian Police, the Australian Federal Police and leading global AML experts.

I want to thank the Australian Government Solicitor’s team led by Senior Executive Lawyer Sonja Marsic, and Senior Counsel Simon White for their work.

I also want to thank the dedicated women and men of AUSTRAC who – through their commitment to making Australia safe – have achieved a very significant outcome.

AUSTRAC will continue to work with our industry partners to educate and support them to achieve best practice compliance, and collaborate with them to detect and disrupt terrorism and serious financial crimes here and overseas.

We are committed to ensuring Australia is not seen as a soft target by those who seek to undermine our way of life and harm our society.

Thank you.

Paul Jevtovic APM
CEO, AUSTRAC