Australia’s Commonwealth Bank has agreed to pay a $530 million fine for breaching anti-money laundering and counterterrorism financing laws. The scandal relates to more than 53,000 suspect transactions that the bank did not immediately report to authorities.
If approved by the Federal Court, this will be the largest civil penalty in Australian corporate history.
At the heart of the case were so-called smart cash machines that allowed customers to anonymously deposit and transfer money. Thousands of suspect transactions of more than $7,600 each were not referred to the authorities as required by law.
An investigation by the Australian Transaction Reports and Analysis Center (AUSTRAC), the federal financial intelligence agency, along with state and federal police found the machines were being used to launder the proceeds of crime.
Australian Treasurer Scott Morrison says the bank must now rebuild its reputation.
“It is for them to rebuild that trust, it is for them to make these admissions, it is for them to incur these penalties and get on with the job of restoring trust in the conduct of the CBA and this, I think, is another important step toward doing that,” Morrison said.
The Commonwealth Bank said its actions were not deliberate but it understood “the seriousness of the mistakes” it had made. It had reportedly been anticipating a fine of about $285 million.
“For AUSTRAC, it is able to demonstrate that there has been serious failings by Commonwealth Bank (CBA), one of our major financial institutions,” said Ian Ramsey, a director at Melbourne University’s Center for Corporate Law. “I am sure what the bank did not want was a very lengthy trial where every day more evidence is brought before the court and then promptly reported in the media of systemic, serious failings by CBA.”
AUSTRAC said the penalty would send a strong message to Australia’s financial industry. Since February it has been investigated by a Royal Commission, Australia’s highest form of inquiry, which has unearthed widespread misconduct within the banking and financial services sector.