Sydney, Australia, Jun 4 – 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 bank and the country’s financial intelligence agency AUSTRAC.
It follows the lender 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.
The bank was also accused of failing to adequately monitor suspected terrorist financiers.
“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” CBA chief executive Matt Comyn said 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 fine 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 from the scandal.
CBA 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 more than 100 suspicious transactions on time, or at all.
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.
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.
The Commonwealth Bank has endured a rocky time since the AUSTRAC case was lodged, with other regulators launching inquiries over its handling of the alleged breaches and its organisational culture.