Commonwealth Bank To Pay $700m Over Money Laundering, Terrorism Financing
It would be the largest civil penalty in national corporate history.
The Commonwealth Bank has agreed to pay $700 million in a landmark Federal Court case over breaches of money laundering and terrorism financing laws, the largest civil penalty in national corporate history.
The bank and financial intelligence agency Australian Transaction Reports and Analysis Centre (AUSTRAC) announced the agreement on Monday, relating to 53,750 breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the bank's failure to monitor transactions and risks.
In a statement, AUSTRAC said investigations with the Australian Federal Police, and NSW and Western Australia's state police forces, "identified that CBA’s [Intelligent Deposit Machines] were being used to launder the illicit proceeds of crime."
"As we have seen in this case, criminals will exploit poor business practices to launder the proceeds of their crimes," AUSTRAC CEO Nicole Rose said.
AUSTRAC alleged, and CBA accepted, that the bank did not properly assess risks of money laundering and terrorism financing relating to its deposit machines, did not provide transaction reports to AUSTRAC on time or report on "suspicious matters" involving large transactions, "did not comply with the requirements of its AML/CTF program relating to monitoring transactions on 778,370 accounts", and did not monitor customers after it became aware of suspected money laundering.
The agreement comes as the royal commission into the banking sector continues.
"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," Rose said.
In a statement to the Australian Stock Exchange on Monday, CBA revealed it would pay a civil penalty of $700 million, as well as AUSTRAC's legal costs of $2.5 million. CBA Chief Executive Officer Matt Comyn apologised to the community for the breaches.
“While not deliberate, we fully appreciate the seriousness of the mistakes we made. Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward," he said.
"Today is another very important step forward, and continuing to make the changes we need in an open, transparent and timely way is my absolute priority as CBA’s new chief executive."
A joint statement from treasurer Scott Morrison, home affairs minister Peter Dutton and attorney-general Christian Porter welcomed the agreement.
“Complying with the law is non-negotiable, especially when it comes to our largest financial institutions that Australians rely on for their homes and businesses and the Government is serious about enforcing any breaches,” Morrison said.
The agreement has been reached between the two parties, but still requires approval from the Federal Court. AUSTRAC said a hearing on the penalty would be scheduled in coming months.