Australian bank to pay record fine in money laundering case

SYDNEY: The Commonwealth Bank of Australia (CBA) on 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 ($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 fallout 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.
After slumping more than 10 per cent over the past month, during which it admitted losing financial records for almost 20 million customers, CBA’s share price rallied 1.44 per cent on the settlement to close at Aus$69.69.
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. They face potential criminal charges.
The scandals led the government early this year to launch a royal commission into misconduct in the finance industry.
The fine for Australia’s largest company 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.
The Commonwealth Bank of Australia admitted last year to the late submission of 53,506 reports to AUSTRAC for cash transactions of Aus$10,000 or more at Automated Teller Machines (ATM), blaming a “systems-related error”. — AFP