Wagering and keno operator Tabcorp admits it did not inform Australia's financial intelligence unit on all occasions it has been suspicious of illegal betting activity.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is taking action against Tabcorp in the Federal Court, claiming the company has failed to comply with anti-money laundering and counter-terrorism financing laws.
The maximum penalty for a contravention of the laws is $17 million.
Tabcorp says it had referred some of the matters of concern to AUSTRAC to gambling regulators and police when they occurred and where appropriate.
"Notifications were not made to AUSTRAC in all cases," Tabcorp said in a statement on Friday.
Tabcorp said AUSTRAC's claims included matters which have been raised by and discussed with AUSTRAC over an extended period.
"Tabcorp has been actively managing these matters in consultation with AUSTRAC on resolving them as a priority," the company said.
Tabcorp said it would file its response to AUSTRAC's legal proceedings in accordance with the court timetable which is yet to be set.
AUSTRAC said earlier this week that it had made a long, comprehensive assessment of Tabcorp's anti-money laundering and counter-terrorism financing compliance, and that the company had failed to take steps to make improvements.
AUSTRAC claims that on dozens of occasions, Tabcorp Holdings, Tab Ltd and Tabcorp Wagering (Vic) failed to provide timely reports on suspicious matters that may be related to credit betting, credit card fraud or other illegal activity.
AUSTRAC also claimed that betting services were provided without Tabcorp having adopted or maintained the anti-money laundering and counter-terrorism financing program applicable to it.
Furthermore, AUSTRAC claimed that betting services were sometimes provided without the proper customer identification procedures.
Some of the incidents outlined in AUSTRAC's statement of claim involved Tabcorp employees or agents placing bets on credit in NSW, which is illegal.
The claims also refer to the National Rugby League game between the North Queensland Cowboys and the Canterbury-Bankstown Bulldogs on August 20, 2010. Tab Ltd suspended betting on the game because of betting anomalies.
Tab Ltd suspended betting on the option of the Cowboys scoring first by way of a penalty goal, after unusually large bets were placed on that option.
Tabcorp notified the NRL of the betting anomaly, and the NRL subsequently notified the NSW Police and the NSW Crime Commission.
But AUSTRAC claims that Tab Ltd did not provide a report to AUSTRAC at all.
Shares in Tabcorp were one cent lower at $4.76 at 1307 AEST.
