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Australia’s Commonwealth Bank agrees to US$530 mln fine over money-
laundering breaches
SYDNEY, June 4, 2018 (BSS/AFP) – The Commonwealth Bank Monday agreed to
the largest civil penalty in Australian corporate history to settle claims it
breached anti-money laundering and counter-terrorism financing laws.
The Aus$700 million (US$530 million) fine — which is subject to court
approval — comes after mediation between the nation’s biggest lender and the
country’s financial intelligence agency AUSTRAC.
It follows the bank being taken to court last August for “serious and
systemic non-compliance” of anti-money laundering laws more than 53,000
times, with AUSTRAC filing 100 further claims in December.
CBA was also accused of failing to adequately monitor suspected terrorist
financiers.
“While not deliberate, we fully appreciate the seriousness of the mistakes
we made,” said CBA chief executive Matt Comyn in a statement.
“Our agreement today is a clear acknowledgement of our failures and is an
important step towards moving the bank forward. On behalf of Commonwealth
Bank, I apologise to the community for letting them down.”
The bank, which in the fall-out has replaced senior leadership overseeing
financial crimes and pumped millions of dollars into improving its systems,
also agreed to pay AUSTRAC’s Aus$2.5 million legal fees.
The scandal is only the latest issue to damage the reputation of
Australian banks, which have been under intense scrutiny amid allegations of
dodgy financial advice, life insurance and mortgage fraud and rigging
benchmark interest rates.
Last week, ANZ Bank was accused of “cartel arrangements” over a multi-
billion-dollar capital raising, along with its advisers Deutsche Bank and
Citigroup, with potential criminal charges pending.
The scandals led the government early this year to launch a royal
commission into misconduct in the finance industry.
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– Criminals exploit system –
The fine for CBA appears to be far larger than expected by the bank, which
in reporting its half-year cash profit in February said it had put aside
Aus$375 million to pay potential penalties.
CBA, Australia’s largest company, last year admitted to the late
submission of 53,506 reports to AUSTRAC for cash transactions of Aus$10,000
or more at ATMs, blaming a “systems-related error”.
It also failed to report 149 suspicious transactions on time, or at all,
and breached its obligations to perform checks on 80 suspicious customers.
According to AUSTRAC’s 583-page statement of claim, some of the
allegations included suspected members of a crime syndicate using fake names
and IDs to make separate cash deposits to CBA accounts.
“CBA’s disregard of its… obligations allowed criminals to exploit its
systems and put the Australian community at risk,” said Home Affairs Minister
Peter Dutton.
“This very large number of breaches over several years is unacceptable and
should never have been allowed to happen.”
He said some of the suspicious financial transactions not reported were
linked to “the international drug trade” and “may have been associated with
terrorism financing”.
AUSTRAC chief Nicole Rose said the outcome was a strong message to the
financial industry that non-compliance with anti-money laundering and
counter-terrorism financing laws would not be tolerated.
“As we have seen in this case, criminals will exploit poor business
practices to launder the proceeds of their crimes,” she said.
“This has real impacts on the everyday lives of Australians and puts the
community at risk by increasing opportunities for terrorists to support
attacks here and overseas, and enabling organised crime groups to peddle
drugs to our families and friends.
“I hope this result alerts the financial sector to the consequences of
poor compliance, and reinforces that businesses need to take their
obligations seriously.”
AUSTRAC said it would be the largest civil penalty in Australian corporate
history if approved by the Federal Court.
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