ENTAINS response to AUSTRAC 31 March 2025 regarding AML issues.

[Chief Stipe]

So @Kit Walker what is your motivation?

[westbrew]

But the issue is what due diligence is being done in NZ? Who is the regulator here, why have they not issued a statement saying that they are aware of Entains issues with Austrac in Australia and they are going to take a look s here in NZ just to assure the public that criminals are not using our TAB??? The TAB business is basically being run out of Entain in Brisbane, and below is from the TAB annual report. 

 TAB NZ does not control Entain NZ or have joint control. This is a significant judgement as the partnering arrangement sets boundaries within which Entain NZ must operate and TAB NZ has a call option to reacquire the Entain NZ business either at termination of the 25-year partnership agreement or on the occurrence of any of the early termination provisions outlined in the strategic partnership agreement. The boundaries of operations are not unreasonable given the legislative and industry requirements that such a business operates within. Substantive rights included in the agreement are either limited or are constructed so that TAB NZ can fulfil its legislative obligations. Therefore, it is considered that these rights do not result in power to direct the relevant activities of Entain New Zealand Limited residing with TAB NZ and that TAB NZ cannot influence the operating and financing activities of Entain NZ. Further TAB NZ do not hold shares in Entain NZ, nor do they have the right to appoint the Directors or direct decision making of Entain NZ. Control of The Betting Accounts and Betting Vouchers Trust (the Trust) As at 31 May 2023, Entain NZ was established as Sole Trustee of the Trust and obtained

[Kit Walker]

Quote

Where is the evidence of that?

Give Google a crack, it's not hard to find.

[Chief Stipe]

42 minutes ago, westbrew said:

Actually that brings up a very important point in New Zealand who does what Austrac does in Australia??? And when was the last time they did an audit of NZ TAB, i don't see any mention in the TAB last annual report that they have had the tick of approval, and i think they would have mentioned it if they have, 

TABNZ/ENTAIN will like any organisation that comes under the rules of the ACT has to supply information to the DIA and FMA on an ongoing and regular basis.  Essentially they are being audited constantly.  If there are data matches that cause red flags to be raised the business will be informed to allow compliance action to take place.

 

Currently there are three agencies in NZ overseeing the enforcement of the AML legislation.

The Reserve Bank;

The Financial Markets Authority (FMA);

The Department of Internal Affairs.

The functions done by these entities is about to be merged into one dedicated organisation.  There are other agencies as well involved - the Ministry of Justice, Police FIU and Customs.  

 

23 October 2024

Government to overhaul anti-money laundering regime

• 

  Hon Nicole McKee

Justice

The Government will introduce a single supervisor and a new funding model in a major overhaul of New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) system, Associate Justice Minister Nicole McKee says.

“Cabinet has approved an AML/CFT reform work programme which will change the supervisor structure that monitors AML/CFT compliance and introduce a new funding model for the system. These reforms will allow the system to be more responsive to industry and community needs, more agile, and more focused on the real risks posed by money laundering to New Zealand businesses.

“The changes will deliver a critical Government priority to reform key sectors where the cost of regulation is overly burdensome for businesses and improve the efficiency and effectiveness of the AML/CFT system to meet international standards.”

The Government is introducing the changes following a Financial Action Task Force evaluation of New Zealand’s regulatory regime and a subsequent review of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

A single-supervisor model will replace the current three-supervisor model and will establish the Department of Internal Affairs as the sole supervisor of the AML/CFT system.  Currently, supervision of different parts of the AML/CFT system are overseen by the Reserve Bank, Financial Markets Authority, and Internal Affairs.

“The Government is very aware of the risks money-laundering and financing of terrorism poses to New Zealand businesses and moving to a single supervisor will improve the efficiency of the system, establish a more risk-based approach, and enable more timely provision of guidance and support. I have heard from businesses that this will provide substantive regulatory relief,” Mrs McKee says.

“In considering how to improve the supervisory model, I will be focusing on how the positive effects can be felt as soon as possible, such as ensuring work on industry guidance and codes of practice starts promptly.”

“The Government will also introduce a new sustainable funding model for the AML/CFT system as part of the reforms. The funding model will establish an industry-levy to support a flexible and coordinated system that will deliver sector benefits. The levy will be designed to ensure that costs are equitable and reasonable for the sector and will not place undue burden on small businesses.”

An AML/CFT National Strategy and work programme will be introduced as part of the funding model. Legislation will require any amendments to the levy to be informed by the National Strategy and work programme.

“This work programme will be developed in partnership with industry and agreed by Cabinet to ensure that the AML/CFT system is focussed on industry priorities. The new funding model will mean better and more efficient regulation, supervision, and support for industry.

“The changes will ensure New Zealand maintains its international reputation and will align our AML/CFT system with the financial sectors of our key trading partners to support trade, investment and economic growth.”

[Kit Walker]

Quote

So @Kit Walker what is your motivation?

Entain in their submission to take over the running of the NZ TAB stated they had great procedures in place to counter possible money laundering - it's obvious they didn't or if they did they failed miserably. They want a monopoly but it makes one wonder if they are capable enough to deserve it. They broke conditions of the agreement one week after taking over. When the five years is up look out.

[Chief Stipe]

8 minutes ago, Kit Walker said:

Give Google a crack, it's not hard to find.

Where in NZ?  You seem to be all over it. Post the detail.

[Kit Walker]

The partnership (ENTAIN and THE TAB )agreement provides no opportunity for government intervention in its details or operation.

 

[Chief Stipe]

2 minutes ago, Kit Walker said:

Entain in their submission to take over the running of the NZ TAB stated they had great procedures in place to counter possible money laundering - it's obvious they didn't or if they did they failed miserably.

Where have they "failed miserably" in NZ?  Bear in mind they were taking over an existing business along with its existing compliance issues if any.

The alledged NZ'er in the article was obviously betting with Ladbrokes Australia.  I guess geo-blocking will stop that.

[Chief Stipe]

2 minutes ago, Kit Walker said:

The partnership (ENTAIN and THE TAB )agreement provides no opportunity for government intervention in its details or operation.

 

What does that mean and where did you extract it from?  Source please.

[westbrew]

Chief i very much doubt there is data exchange between regulators and tab in NZ. There maybe occasional audits, but there is no way that FMA RBNZ or DIA are getting any data from Entain. When you read risk based approach, that is code for do what you want we are asleep at the wheel over here. Entain may send STRs to the police and are required to answer any incoming requests from IRD or Police, but there is no effective way for a regulator to monitor weather in fact Entain are doing the due diligence required of them outside of an audit, thus you are relying on the culture of the organisation, and the TAB has gone from a state controlled entity, to a branch of a Corporate bookmaker based in Australia so is the culture of compliance the same????? 

[Chief Stipe]

35 minutes ago, westbrew said:

Chief i very much doubt there is data exchange between regulators and tab in NZ. There maybe occasional audits, but there is no way that FMA RBNZ or DIA are getting any data from Entain.

I'm sorry to say but you are wrong.  Under the AML/CFT legislation financial institutions, casinos, and other businesses identified as potentially vulnerable to money laundering and terrorist financing are considered reporting entities and have obligations to comply with AML/CFT regulations. 

These organisations have rule based software systems that create data files that are regularly exchanged with the DIA.  There is no way with the TABNZ/ENTAIN turnover that they are not exchanging data. 

Activities that trigger compliance obligations are known as "captured activities" and have been identified by the DIA as potentially exposing businesses to the risk of money laundering and terrorist financing. 

Prescribed Transactions:
Certain transactions, such as international wire transfers of $1,000 or more and physical cash transactions of $10,000 or more, are considered "prescribed transactions" and must be reported to the DIA. 

Data Exchange:
The DIA requires reporting entities to exchange data related to these transactions and activities, including customer identification data, transaction details, and any information that could assist in identifying or preventing money laundering or terrorist financing. 

[Chief Stipe]

39 minutes ago, westbrew said:

When you read risk based approach, that is code for do what you want we are asleep at the wheel over here. Entain may send STRs to the police and are required to answer any incoming requests from IRD or Police, but there is no effective way for a regulator to monitor weather in fact Entain are doing the due diligence required of them outside of an audit, thus you are relying on the culture of the organisation, and the TAB has gone from a state controlled entity, to a branch of a Corporate bookmaker based in Australia so is the culture of compliance the same

Not true.  The difference in the AUSTRAC case is the issues indentified in their Statement of Claim had their origin with the Ladbrokes business.  ENTAIN took over the NZ customer base and migrated to their online betting system those customers that have been subjected to quite thorough due diligence. 

There is an expectation underpinned by regulations and legislation in NZ that ANY entity dealing with large amounts of monetary transactions HAS to electronically send data to the DIA.  I've had some work experience in this area and it wasn't unheard of for the data that was sent to trigger a red flag with the DIA which in the first instance notified the business and requested more information.

The only way for ENTAIN to circumvent that system is to manipulate the data transfer.  TABNZ still have a governance role in that respect.  

[westbrew]

Well i will bow to your superior knowledge around the systems used to share data between tab/casinos and the DIA, it seems like everything is all good here in NZ, as you say the only way to circumvent it would be to manipulate the data, and it is highly unlikely that any organisation would try and get one over the New Zealand department of internal affairs.

[Chief Stipe]

16 minutes ago, westbrew said:

Well i will bow to your superior knowledge around the systems used to share data between tab/casinos and the DIA, it seems like everything is all good here in NZ, as you say the only way to circumvent it would be to manipulate the data, and it is highly unlikely that any organisation would try and get one over the New Zealand department of internal affairs.

I didn't say it was "all good" but we've all experienced one way or another the AML laws in NZ.  But do you seriously think that ENTAIN would try and rort the system in NZ?  Sky Casino got nailed last year.  I would say unlike other acquisitions ENTAINS NZ customer database and their transactions would be quite clean.

ENTAIN would be very very stupid to jeopardise their monopoly license in NZ.

The AUSTRAC case if you ignore the BS journalists is at a low end of the scale compared to what AUSTRAC have taken on previously in OZ.

[Kit Walker]

https://www.dia.govt.nz/diawebsite.nsf/Files/Regulatory-Impact-2024/$file/RIS_Protecting-TAB-NZ's-from-offshore-betting-to-ensure-a-sustainable-racing-industry_Redacted.pdf
 

Quote

Quote

What does that mean and where did you extract it from?  Source please.

• Quote

 

The meaning is self explanatory. 

Section 1 #19

You might find some other things interesting as well. 

RIS_Protecting-TAB-NZ's-from-offshore-betting-to-ensure-a-sustainable-racing-industry_Redacted.pdf.html

Edited 14 hours ago by Kit Walker

[Chief Stipe]

1 hour ago, Kit Walker said:

https://www.dia.govt.nz/diawebsite.nsf/Files/Regulatory-Impact-2024/$file/RIS_Protecting-TAB-NZ's-from-offshore-betting-to-ensure-a-sustainable-racing-industry_Redacted.pdf
 

The meaning is self explanatory. 

Section 1 #19

You might find some other things interesting as well. 

RIS_Protecting-TAB-NZ's-from-offshore-betting-to-ensure-a-sustainable-racing-industry_Redacted.pdf.html 2.31 MB · 2 downloads

I know where the quote comes from  but in your opinion Greg what does it mean?  You seem to be inferring something but it is unclear what.

[Kit Walker]

Greg ? Who the hell is Greg?

[curious]

8 minutes ago, Kit Walker said:

Greg ? Who the hell is Greg?

Never mind that Kit. Would you please answer CS's question about what you are inferring. I'm curious. Also, what chance do you think there is of the monopoly being extended to include online betting?

Edited 12 hours ago by curious

[Kit Walker]

I think it will go through to the total detriment of the NZ punter.  The politician's are clueless on betting and will vote like sheep.

The crap will hit next year when 15 online casino sites are licensed. I no where the majorly of young peoples betting will be going. What NZ racing is losing to overseas betting sites on sports and racing is way less than what online casinos are ripping from the entertainment dollar. That coupled with loss of Greyhound revenue will hurt. Ohh and the sports codes are currently collectively addressing the Government to receive all profits from sports betting. 

[Kit Walker]

This person is onto it.

 

I'm writing to strongly oppose this bill. As a keen observer of the industry, and recreational player I feel I'm very well placed to offer an informed objective opinion on this bill. In my opinion Entain very clearly operates a no long term winners trading policy. It is abundantly clear both anecdotally and from a personal account of betting with them or their subsidiaries over the last 20 years that as soon as you turn a long term profit you will have your bets heavily restricted to a point where you have no option but to go elsewhere to have a bet. It is a trading practice that preys on losing customers and has no room for customers that have the slightest edge in the market or turn a consistent profit. In my opinion Entain operates the most aggressive restrictive trading practice in the industry and their current trading model is completely unfit for a monopoly where consumers lose the option to bet elsewhere. It is the antithesis of safer gambling, where only long term losing customers are welcome. It is a model that simply does not allow customers to win over the long term. It is common for a customer to be restricted and offered as little as 10 dollars on an All Blacks match, and even less on an NPC game once they start to show the slightest bit of betting nouse. Let's have a hypothetical example - Do you like the Canterbury odds at home this week against North Harbour in the NPC? You've done some research, you think North Harbour may be concentrating on their match the following week against Auckland - a more winnable opportunity, hence the reason you like the odds on Canterbury. Fairly logical thinking right? A bet on this on a Wednesday for Saturday's game followed by the market moving significantly in your direction (odds get lower) will nearly always result in your account being restricted the following week. If it is not restricted the following week, it is restricted the week after. This is the stark reality of modern day bookmaking, winning customers are quite simply eliminated, and why it makes a monopoly completely unfeasible in modern day bookmaking. Responsible gamblers bet for two reasons, for entertainment purposes, and to try and win some money. Unlike the casino, sport and racing odds are inefficient and subjective, it is a game of your opinion against the bookmakers with a nice little margin in the bookmakers favour to cover that degree of inefficiency and subjectiveness. Everything is stacked in the bookmakers favour. To then restrict customers playing to a point where they have to go elsewhere to bet simply because as a global conglomerate making hundreds of millions of dollars a year they cant face losing even the most nominal amount to customers who bother to do some research is incredibly unethical and once again completely unfit for a monopoly which restricts choice. The betting eco system relies on winning customers to function. It also relies on customers winning to function. It simply will not function long term without winning customers framing the market to a point where it is positive expected value for a bookmaker to take bets on both sides. It will also not function under a high margin trading strategy where uncompetitive odds are offered. Customers become disinterested when they lose too fast. Entain quite clearly ignore these very two key parts of the betting eco system in a trading practice that has one thing in mind - appeasing shareholders through maximising profits to the detriment of customers. This is facilitated by removing winning customers and even removing net zero customers from their books to increase margin and profits. Unless you lose consistently you are simply not welcome. If this bill gets passed some keys points must be addressed. Minimum Bet Laws The government must guarantee robust minimum bet guarantees on sport and racing by selection (not market) with no exceptions so everyone can participate in the market at their free will to a respectable amount. Australia operates a Minimum bet guarantee on racing. The parameters are to win 2k on metro racing. Please note the difference of a bet guarantee to a bet. $2000 = $200 @ 11.0 or $400@ 6.0 it is not a guarantee of $2000 at any odds. However under their system and free market within Australia you can operate with 20+ bookmakers so the real limit is closer to 40k. This must be taken into account when structuring a minimum bet guarantee. It simply must be higher to fall in line and simply has to be extended to sports betting. There can be no grey area that allows Entain to act in an arbitrary manner against customers restricting trade using outs granted to them under safer gambling and arbitrage/bonus abusers small print. They can not be allowed to treat customers in an arbitrary manner that restricts trade. The lines between acting on customers under safer gambling protocol can not be blurred or used to act on normal winning customers. Bet guarantees have to be applied to sport by selection, and not by event. Competitive odds. Currently Entains product is one of the most uncompetitive from a bookmakers margin point of view in the world. Standardised industry odds are now 1.91 v 1.91 in a two way market across the global betting market, some bookmakers are 1.93 v 1.93, betfair exchange is roughly 1.97 after commission. It is the default for The TAB to offer 1.87 v 1.87 or even 1.83 v 1.83. Currently they are obliged to contribute a turnover tax to NZ sporting bodies which goes some way to explain this uncompetitive pricing strategy on some sports, but other sports are just inexcusably uncompetitive from an odds and market percentage point of view where no turnover takeouts are required.

Turnover takeouts to sporting bodies can simply not be used as an excuse to offer a grossly inferior product to the NZ betting public under monopoly restrictions. I suggest minimum market percentages of 104-105% must be enforced. The failure to do this simply means customers lose quicker, and lose interest quicker, turnover then drops, and the entire industry suffers. Once again it is the antithesis of safer gambling. High take outs are catastrophic for the betting eco system and stifle turnover and lead to greater gambling harm. It is irrefutable. Another area of great concern is markets with 4 or more selections. they are extremely uncompetitive from a margin POV. A top bat cricket market is sometimes routinely bet to 140% for Eleven selections. There is no consistency to their trading margins for markets with more than 4 selections in a market. It is this kind of defensive, erratic pricing that has contributed to turning customers off shore in the first place. There is zero consistency of product in regards to margin. How can this practice of uncompetitive and inconsistent pricing possibly be trusted under a monopoly? It almost appears their traders are not even aware of competitive market percentages once they get past 4 selections. The art of odds compiling and percentage per runner formulas appears non-existent. It is simple but very important intricacies like this that provide an insight into their trading practices and inability to be competitive in a free market where they should be, never mind a monopoly. Betfair exchange. I plead with the members to take a meeting with Betfair Exchange and understand the intricacies of the exchange and how it differentiates from a fixed odds bookmaker i.e. The Tab. There is almost zero crossover of customers who currently operate in the exchange space that will filter back to the fixed odds model Entain provides i.e The Tab. It is a trading platform that allows the active trading and framing of the sports betting markets through peer to peer exchange, there is simply no equivalent product offered by Entain should it be banned. It would be like banning yogurt under a milk monopoly. It is vital to the betting eco system and is also a key product used by Entain themselves to frame their own markets and hedge their business. From a financial standpoint a banning of the Betfair exchange will lead to thriving black markets as these customers seek a product no longer available in NZ. Likewise the POC tax will simply disappear from customers who do not cross over back to a fixed odds product, because that product now fails to exist. It is a lose lose for the consumer, the betting eco system, the industry, and the government. It is quite literally an unparalleled product in NZ. An exchange exemption will help provide a robust betting market in NZ that will complement fixed odds turnover while still allowing the industry to prosper from tens, if not hundreds of millions of dollars of turnover driven through the exchange each year from NZ players. It is incredibly misinformed to think that even 1% of the betfair exchange turnover will return to a NZ fixed odds monopoly. This is why it is essential for the committee to understand the intricacies of the exchange market vs a fixed odds market. It is also in my opinion highly unethical that Entain should be able to hedge through the betfair exchange to offset their own risk, along with framing their own markets using the platform, while the rest of the NZ public is left out. Once again it's the equivalent of Entain getting to purchase yogurt and rest of NZ being banned. In summary, I believe granting Entain a monopoly under their current trading practices shows a complete misunderstanding of how a modern day bookmaker operates, what really drives betting turnover, and the restrictive and arbitrary manner customers are treated. It also naively assumes that lost turnover will simply just return to NZ. I can't even begin to explain just how misinformed this is. It is astonishing that a 25 year handcuff is being floated for 100 Million dollars when other free market options are available. The NZ consumer should not be punished for the racing industry’s failures.

[curious]

Dead on. Totally agree Kit but will the Government listen to that or the spin?

[Murray Fish]

1 hour ago, Kit Walker said:

They can not be allowed to treat customers in an arbitrary manner that restricts trade.

Which they often do with sports betting, by taken down options and then open them again at their will!  meanwhile! Many others are giving you a option bet that you need re your betting on the event/result!  Talking Snooker, MLB, NFL..

[Murray Fish]

1 hour ago, Kit Walker said:

The NZ consumer should not be punished for the racing industry’s failures.

30+ years back, a few of us try to get a Punter Ass up and running! paid for via 'lost ticket' money! We did get the ear of Head Office, but actual PA not so,,,, sigh, don't think the common punter has been ever treated that well,,.

[curious]

1 hour ago, curious said:

Dead on. Totally agree Kit but will the Government listen to that or the spin?

Also, I see nothing in the submissions or RIS about how they will manage the digital currency bookies in all this.