The Australian arm of a global bank is the latest financial institution to be fined for breaching anti-money laundering laws.
The US-based State Street bank has been hit with a $1.24 million infringement notice for failing to declare international transfer instructions that potentially left it exposed to organised crime, terrorism, slavery, drug trafficking and tax evasion being committed via its facilities.
The ABC understands State Street was fined $12,000 for each of the 99 breaches, which the bank self-reported to the Australian Transaction Reports and Analysis Centre (AUSTRAC).
AUSTRAC deputy chief executive Peter Soros told AM financial institutions need to report foreign transactions accurately and on time to counter serious organised crime.
“State Street has worked with us on this matter but it’s really important that all businesses regulated by AUSTRAC take this seriously,” Mr Soros said.
“We continue to see the evolution of the criminal mindset. Financial crime is a continually evolving and challenging landscape.”
“Criminals will continue to look at a range of methods and tools to exploit the system. International fund transfers provide us with important intelligence on potential exploitation.”
The State Street fine is tiny compared to the $700 million settlement by Commonwealth Bank for almost 54,000 breaches revealed by the ABC in 2017.
Westpac has put aside $900 million for a potential fine after it breached anti-money laundering rules 23 million times.
Mr Soros refused to comment on whether a $900 million penalty would be appropriate for Westpac.
“I’m sure you can appreciate this is an ongoing matter that’s before the courts so I’m not in a position to provide any updates and prepared to speculate on those matters,” Mr Soros said.
Mr Soros also refused to confirm that discussions were continuing with National Australia Bank and ANZ, amid speculation AUSTRAC could launch legal action later this year.
“I’m not going to comment on other companies, but all of our reporting entities clearly understand what their obligations are,” Mr Soros said.
However, Mr Soros told AM that the entire financial sector was on notice.
“All of the businesses we regulate, whether you’re a big Australian bank or a money remitter, there is a very clear obligation. It’s critical to keep Australia safe from organised crime.”
In a statement, State Street confirmed the reporting infringements and said there was no business or financial impact to any clients.
“We have reviewed our reporting systems and have worked with an independent consultant to develop a remediation plan to address the issue,” a spokesperson said.
“There is no suggestion that the transactions in question were suspicious nor that there were deficiencies in State Street’s customer due diligence.”
AUSTRAC has also confirmed it is continuing with work with PayPal and the buy-now-pay-later company Afterpay to ensure their compliance systems have been fully audited to ensure foreign transaction rules are not breached.