The Commonwealth Bank has been accused of a staggering 53,700 breaches of money laundering laws by Australia's financial intelligence and regulatory agency, AUSTRAC.
AUSTRAC on Thursday initiated civil penalty proceedings in the Federal Court against the Commonwealth Bank of Australia (CBA) for serious and systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
AUSTRAC acting CEO Peter Clark said that this action follows an investigation by AUSTRAC into CBA's compliance, particularly regarding its use of intelligent deposit machines (IDMs).
"The effect of CommBank's conduct in this matter has exposed the Australian community to serious and ongoing financial crime," AUSTRAC said in statement.
- The Commonwealth Bank's Intelligent Deposit Machines (IDM) allow up to $20,000 to be deposited as a cash transaction;
- Austrac says at least five syndicates exploited the IDM cash deposit system, which allowed money to be deposited and then withdrawn internationally and at speed;
- Austrac says the bank did not take any steps to assess the money-laundering/terror-financing risks posed by IDMs until mid 2015, by which time about $8.91 billion had passed though IDM channel;
- Commbank failed to give on-time reports of transactions over $10,000 53,506 times, Austrac says.
"Non-reporting of and late reporting both delays and hinders law enforcement efforts. Delays in this case have resulted in lost intelligence and evidence (including CCTV footage), further money laundering and lost proceeds of crime."
AUSTRAC's action alleges over 53,700 contraventions of the act. AUSTRAC said Commonwealth Bank failed to give 53,506 threshold transaction reports on time for cash transactions of $10,000, which had a total value of around $624.7 million.
The bank also failed to report suspicious matters either on time or at all involving transactions totalling over $77 million.
In a statement, CommBank said it took its regulatory obligations "extremely seriously" and said it was one of the largest reporters to AUSTRAC. The bank said it had invested $230 million in our anti-money laundering compliance and reporting processes and systems.
"All of our people are required to complete mandatory training on the Anti-Money Laundering and Counter-Terrorism Financing Act," the statement said.
"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," the Bank said.
"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 money laundering undermines the integrity of the 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," the bank said.
Treasurer Scott Morrison described the matter as 'very serious.'
"(It) is being pursued by appropriate authorities, we should allow them to continue to do this work," he said.
"The Government will continue its work to ensure our banks are strong, fair, accountable and competitive, and we will be introducing legislation during the spring session implementing further changes to this end."
In March gaming company Tabcorp was fined $45 million for breaches of anti-money laundering and counter-terrorism financing laws after the Federal Court found Tabcorp failed to alert regulators to reports of suspicious behaviour on 108 occasions over more than five years.