Court approves history-making settlement between Comm Bank and AUSTRAC

Written on the 20 June 2018 by Paris Faint

Court approves history-making settlement between Comm Bank and AUSTRAC

The Federal Court has today approved settlement between Commonwealth Bank (ASX: CBA) and the Australia Transaction Reports and Analysis Centre (AUSTRAC) over the anti-money laundering case which was brought against the financial services giant in August last year.

CBA agreed in early June 2018 that it would pay $700 million in civil penalties to the regulator, a figure which the Court has now approved.

The settlement is the largest of its kind in Australian corporate history and is worth almost double the amount that CBA initially predicted. At the half year, the bank announced that it had only set aside $375 million to cover the costs of the proceedings.

CBA will pay the $700 million penalty in addition to AUSTRAC's legal costs of $2.5 million.

The initial claim detailed that CBA failed to notify AUSTRAC 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.

AUSTRAC also found the bank did not adequately monitor the use of its IDM's or assess the risk of money laundering or terrorism finance through their use. The conduct was labelled a 'serious' and systemic breach.

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 earlier this month that the bank's risk procedures and due diligence were inadequate.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made," Comyn said on June 4.

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

CBE expects to recognise the $700 million expense in its financial statements at the full year which will be released on 8 August.

 
Author: Paris Faint

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