CBA settles anti-money laundering case for $700m

Written on the 4 June 2018 by Ben Hall

CBA settles anti-money laundering case for $700m

Commonwealth Bank has agreed to pay $700 million to the anti-money laundering regulator after it admitted to breaching the law on more than 50,000 separate occasions.

CBA settled its anti-money laundering and counter-terrorism case brought by AUSTRAC and also agreed to pay $2.5 million in legal fees although the agreement still needs Federal Court approval. If the court approves the settlement, it will be the largest of its kind in Australian corporate history.

The settlement was almost double the amount that Commonwealth Bank predicted as it had set aside $375 million for the proceedings as announced in its first half results in February.

AUSTRAC, which is the federal government's financial crime agency, filed its claim alleging CBA failed to notify it of more than 53,000 transactions at its network of so-called 'intelligent' automated cash deposit machines (IDMs), with a total transaction value of $624 million.

The scandal led to Ian Narev's departure as chief executive and he was replaced in April by Matt Comyn, who says the bank did not deliberately breach the law by failing to provide the regulator with timely notification of potentially suspicious transactions.

However he did admit the bank's risk procedures and due diligence were inadequate.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made," Comyn says in a statement.

"Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward."

CBA will record a $700 million provision in its results for the year to June 30, which will be announced on August 8.

Comyn says CBA has now spent more than $400 million on anti-money laundering compliance measures.

"Banks have a critical role to play in combating financial crime and protecting the integrity of the financial system," Comyn says.

"We have also agreed with AUSTRAC that we will work closely together based on an open and constructive approach."

It was alleged the bank breached the anti-money laundering laws for a period of three years between 2012 and 2015 and relates to its network of so-called 'intelligent' automated cash deposit machines (IDMs).

The IDMs used by the Commonwealth Bank accept deposits both by cash and by cheque and the transactions had a total value of $624million.

AUSTRAC alleged that deposits are automatically counted and instantly credited to an account which can be located both domestically and internationally.

The case against CBA pointed out that the IDMs can accept up to 200 notes per deposit or up to $20,000 per cash transaction with no limit on the number of transactions per day.

AUSTRAC alleged the bank did not adequately monitor the use of the IDM's or assess the risk of money laundering or terrorism finance through their use.

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Author: Ben Hall

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