Shares in Tabcorp crashed 28% after the Australian financial firm AUSTRAC announced its investigation into serious concerns about the betting giant’s protections against money laundering and financing of terrorism. The investigation knocked A$700 million off the company’s market capitalisation.
Key Highlights
- Tabcorp shares went down 28% at their lowest ever intraday price.
- The total market capitalisation of the company shrank by about A$700 million.
- AUSTRAC had concerns about the company’s financial crime risk management capability.
- The survey will investigate TAB compliance at about 4,000 locations across the country.
- It is not the first time it has faced such scrutiny with a A$45 million money-laundering settlement also in 2017.
Regulatory Investigation Threshold Opens May 7
Tabcorp announced that AUSTRAC (Australian Transaction Reports and Analysis Centre) has initiated a formal enforcement investigation. The inquiry is investigating whether Tabcorp has implemented and complied with an appropriate anti-money-laundering and counter-terrorism-financing program. Tabcorp shares fell as much were down to a 10-week low of A$0.825 during trading on the back of this regulatory action.
Why Did Shares Crash and How Does the Probe Work
AUSTRAC launched its investigation because of Tabcorp’s belief that it cannot identify or manage financial crime risks across such a big network. Tabcorp is one of the dominant players in Australia’s A$30 billion (US$19.7 billion, £16.3 billion) industry, spread across 4,000 physical outlets including pubs and clubs as well as both TAB agencies.Â
The company is already looking at how Tabcorp keeps tabs on customers and whether it has complied with legal reporting responsibilities. Slumping attendance led CEO Gillon McLachlan to say the firm was undergoing a large-scale overhaul and that it would fully assist the regulator in resolving issues.
Expert Analyses and Historical Risk
This is not the first time Tabcorp has faced AUSTRAC, and market analysts are especially worried. The company in 2017 paid a record A45 million penalty, then the highest fine ever for such money-laundering allegations. Experts believe Tabcorp may face even higher penalties for a repeat offender, if convicted of anything more serious. Although the investigation is early and no final enforcement action has been promised, the A700 million market cap loss shows that investor fears are deep. Some major shareholders, including AustralianSuper and Aware Super, are said to be closely watching amid wider pressure in the gaming sector for stricter social and financial governance.
FAQs
- Why did the shares of Tabcorp fall?
Shares fell 28% after the government announced it would investigate potential money-laundering controls in a company.
- Has Tabcorp been fined before?
Yes, in 2017 they paid A$45 million for similar compliance failures.
- How many TAB outlets are involved?
The investigation encompasses the complete network of the business, which features approximately 4,000 locations throughout the country.
Follow Inspirepreneur Magazine for daily global business news.
