The Commonwealth Bank says its failure to notify AUSTRAC of more than 53,000 large cash deposits in its intelligent deposit machines was caused by a software error which was not discovered for more than two years.
In a public statement CBA outlined how when the machines were first rolled out in May 2012, no such error existed. But due to an unrelated software update in late 2012, a coding error occurred which meant the IDMs did not create the required threshold transaction reports.
According to CBA the error became apparent in 2015, after which AUSTRAC was notified.
"The vast majority of the reporting failures alleged in the statement of claim (approximately 53,000) relate specifically to this coding error," CBA said.
"Our Intelligent Deposit Machines (IDMs) are now providing the correct Threshold Transaction Reports (TTRs) to AUSTRAC, and have been since September 2015," CBA added.
On a broader note, the bank conceded that in any large organisation, "mistake can be made" which can have a "significant impact", and that they are working to be more vigilant in the area of financial crime and anti-money laundering.
"The rapid evolution of technology in banking, the increased sophistication of criminal activity, and higher regulatory expectations together create an imperative to continuously raise our standards," the statement said.
"We have increased our investment in people, technology and processes through a program designed not only to address existing weaknesses, but also to meet the growing complexity in this area."
On Friday, AUSTRAC initiated Federal Court proceedings against the bank, alleging that CBA contravened the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 more than 53,000 times.
The allegations include that CBA was late to report IDMs were potentially being used by multiple suspected money laundering syndicates, linked to criminal activity including drug importation, to deposit cash before immediately transferring the funds offshore.
CBA is currently reviewing the 580 page statement of claim filed by AUSTRAC in the Federal Court, and has indicated its intention to file a defence.
CBA opened the market at $80.11, before being up slightly to $81 a short time ago.