Thursday, December 9, 2021

Commonwealth Bank fined $700m over anti-money laundering breaches

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The Commonwealth Bank has 28 days to pay a $700 million fine imposed by the Federal Court over legal breaches that enabled criminals to launder money through its ATMs.

CBA has admitted to breaking laws designed to stop money laundering and terrorism financing, including its failure to refer more than 53,000 reports of deposits of $10,000 or more to Australia’s financial intelligence agency, Austrac.

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In handing down his judgment in Sydney on Wednesday morning, Justice David Yates said crime syndicates had used a system flaw in the bank’s Intelligent Deposit Machines to deposit “the proceeds of drug and firearms importation”.

“Cash could be deposited anonymously any time at hundreds of locations,” Justice Yates said.

He said the fine, agreed upon earlier this month by both CBA and Austrac, which is the largest civil penalty imposed in Australian history, would deter others from contravening the laws.

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“It marks the court’s strong disapproval of the bank’s conduct,” Justice Yates said.

The bank has previously said the breaches were due to a system error with its new ATMs, in use since 2012, which failed to introduce a daily limit on how much customers could deposit.

Justice Yates said $17.5 million deposited during those transactions were connected with money laundering syndicates being investigated or prosecuted by police.

Six of those deposits had been flagged as being potentially connected with financing terrorism.

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An agreed statement of facts filed to the court said the criminal syndicates relied upon money laundering syndicates to import and distribute their drugs, predominantly methamphetamine.

The bank also admitted it had been too slow to close an account it suspected was linked to financing terrorism.

Justice Yates said that, in certain cases, the bank gave customers 30 days before closing their accounts, resulting in further suspicious activity being allowed.

Among the contraventions that made up the $700 million penalty was the bank’s failure to file 149 “suspicious matter reports”, either on time or at all.

Justice Yates said that on 40 occasions the bank hadn’t reported suspicious activity because it had filed similar reports in the previous three months.

The court heard CBA failed to report 29 occasions in which members of crime syndicates opened accounts using false identification.

Justice Yates said the bank had failed to report obvious patterns of money laundering.

The bank also admitted to failing properly to assess and control the risk of its IDMs being used for terrorism financing and money-laundering activities, and failed its “ongoing customer due-diligence requirements” in respect of 80 customers.

Justice Yates said the bank accepted “it needs to be ever vigilant in these areas” and had since improved its systems and procedures.

CBA, which has agreed to pay Austrac’s legal costs, has 28 days to pay the fine.

In a previous statement published when the penalty was agreed upon, CBA chief executive Matt Comyn apologised to the community.

“While not deliberate, we fully appreciate the seriousness of the mistakes we made. Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward,” Mr Comyn said.

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