Could Commonwealth Bank be fined a trillion dollars for systemic law breaching?

Failure to comply with anti-money laundering and terror financing legislation could leave the Commonwealth Bank of Australia (CBA) facing enormous fines.

The Australian Transaction Reports & Analysis Centre (AUSTRAC) has launched civil proceedings, claiming that CBA breached laws relating to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) on no fewer than 53,700 occasions.

If the maximum penalty is carried for each offence (AU$18mn), then the total fine could breach $1trn.

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AUSTRAC acting CEO Peter Clark said that this action follows an investigation by AUSTRAC into CBA’s compliance, particularly regarding its use of intelligent deposit machines (IDMs).

He said: “By failing to have sound AML/CTF systems and controls in place, businesses are at risk of being misused for criminal purposes," Mr Clark said.

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

"We believe this can be achieved by working collaboratively with and supporting industry. We will continue to work in this way with our industry partners who also share this aim and demonstrate a strong commitment to it."

Here is a summary of AUSTRAC’s accusations:

• CBA did not comply with its own AML/CTF program, because it did not carry out any assessment of the money laundering and terrorism financing (ML/TF) risk of IDMs before their rollout in 2012. CBA took no steps to assess the ML/TF risk until mid-2015 - three years after they were introduced.
• For a period of three years, CBA did not comply with the requirements of its AML/CTF program relating to monitoring transactions on 778,370 accounts.
• CBA failed to give 53,506 threshold transaction reports (TTRs) to AUSTRAC on time for cash transactions of $10,000 or more through IDMs from November 2012 to September 2015.
• These late TTRs represent approximately 95 per cent of the threshold transactions that occurred through the bank’s IDMs from November 2012 to September 2015 and had a total value of around $624.7 million.
• AUSTRAC alleges that the bank failed to report suspicious matters either on time or at all involving transactions totalling over $77 million.
• Even after CBA became aware of suspected money laundering or structuring on CBA accounts, it did not monitor its customers to mitigate and manage ML/TF risk, including the ongoing ML/TF risks of doing business with those customers.