Australian Regulator Starts Legal Case Vs Bank For AML, Terrorism Finance Rule Breaches

Tom Burroughes

4 August 2017

Australia’s financial intelligence and regulatory agency, for "serious and systemic non-compliance" with rules to stop money laundering and terrorism finance.

AUSTRAC alleges that the bank failed to report suspicious matters either on time or at all involving transactions totalling over A$77 million ($61.2 million).

The case has been taken in Australia's federal court, the agency said yesterday in a statement. The announcement comes after AUSTRAC probed CBA's compliance, particularly over its use of "intelligent deposit machines". The agency said there were 53,700 breaches of the the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

"We have been in discussions with AUSTRAC for an extended period and have cooperated fully with their requests. Over the same period we have worked to continuously improve our compliance and have kept AUSTRAC abreast of those efforts, which will continue," the bank said in a statement. "We take our regulatory obligations extremely seriously and we are one of the largest reporters to AUSTRAC. On an annual basis we report over four million transactions to AUSTRAC in an effort to identify and combat any suspicious activity as quickly and efficiently as we can."

Setting out its claim, AUSTRAC said the bank didn't comply with its own AML/CTF programme, because it did not carry out any assessment of the money laundering and terrorism financing (ML/TF) risk of IDMs before their rollout in 2012. "CBA took no steps to assess the ML/TF risk until mid-2015 - three years after they were introduced," it said.

"For a period of three years, CBA did not comply with the requirements of its AML/CTF program relating to monitoring transactions on 778,370 accounts," it continued.

"CBA failed to give 53,506 threshold transaction reports (TTRs) to AUSTRAC on time for cash transactions of $10,000 or more through IDMs from November 2012 to September 2015," it said. "These late TTRs represent approximately 95 per cent of the threshold transactions that occurred through the bank’s IDMs from November 2012 to September 2015 and had a total value of around A$624.7 million."

Even after CBA became aware of suspected money laundering or structuring on CBA accounts, it did not monitor its customers to mitigate and manage ML/TF risk, including the ongoing ML/TF risks of doing business with those customers, the agency said.

CBA comment
"We have invested more than A$230 million in our anti-money laundering compliance and reporting processes and systems, and all of our people are required to complete mandatory training on the Anti-Money Laundering and Counter-Terrorism Financing Act," CBA said in its own statement on the matter.

"Money laundering undermines the integrity of our financial system and impacts the Australian community’s safety and wellbeing. We will always work alongside law enforcement, intelligence agencies and government authorities to identify, disrupt and prevent this type of activity. We are reviewing the nature of the proceedings and will have more to say on the specific claims in due course," it added.