AUSTRAC Commences Civil Proceedings Against CBA for 'Serious' and 'Systemic' Breach

Friday 4 August 2017 @ 1.27 p.m. | Crime

The Australian Transactions Reports and Analysis Centre (AUSTRAC) have launched civil proceedings against the Commonwealth Bank of Australia (CBA) for alleged ‘serious and systemic’ breaches of the Commonwealth Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Altogether, AUSTRAC alleges that CBA failed to comply with the law on 53,700 separate occasions that could expose CBA to massive civil penalties.

Allegations

AUSTRAC acting CEO Peter Clarke explained that the action was initiated as a result of an investigation into CBA’s compliance with key legislation especially with regards to the use of intelligent deposit machines (IDM). According to the AUSTRAC website, the allegations of non-compliance were:

  • CBA had failed to comply with its own anti-money laundering and counter-terrorism financing programs as it had no carried out any risk assessments of IDMS regarding the matter before the machines were introduced in 2012. CBA did not take any steps to assess the risks until 2015.
  • CBA did not comply with its own anti-money laundering and counter-terrorism financing requirements concerning the monitoring of transactions on over 770,000 accounts for a period of three years.
  • CBA failed in its obligation to submit threshold transaction reports to AUSTRAC on time for cash transactions of $10,000 or more through IDM totalling 53,506 accounts.
  • CBA failed to report suspicious matters involving transactions totalling over $77 million.
  • CBA did not monitor or mitigate money laundering and terrorism financing risks even when they became aware of suspected money laundering or structuring on CBA accounts.

The maximum penalty for each of the 53,700 alleged contraventions is up to $18 million. According to the statement filed by AUSTRAC, deposits are automatically counted and instantly credited to the target account which can be located domestically or internationally. It was further noted that IDMs could accept deposits of up to $20,000 per cash transaction with no limit on the number of transactions made per day.

CBA Response

CBA has released a statement confirming its full cooperation with AUSTRAC to improve its compliance with anti-money laundering and terrorism financing measures. The statement said:

"We take our regulatory obligations extremely seriously and we are one of the largest reporters to AUSTRAC…On an annual basis we report over 4 million transactions to AUSTRAC in an effort to identify and combat any suspicious activity as quickly and efficiently as we can. We will always work alongside law enforcement, intelligence agencies and government authorities to identify, disrupt and prevent this type of activity."

Mr Clarke said that the proceedings should serve as a warning to all industry players that it is extremely important for them to meet their anti-money laundering and terrorism financing obligations:

“AUSTRAC's goal is to have a financial sector that is vigilant and capable of responding, including through innovation, to threats of criminal exploitation."

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.

Sources:

Related Articles: