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ASIC drops CBA investigation

Commonwealth Bank has announced the corporate watchdog will not be taking any action against the bank nor its directors over a money laundering and counter-terrorism scandal identified by AUSTRAC three years ago.

In an ASX announcement, CBA told investors that ASIC had concluded its investigation into the bank and would not be taking any enforcement action in relation to the group's disclosure of the matters, while investigations into whether directors of the bank had complied with the Corporations Act had also been dropped.

In August 2017, AUSTRAC alleged the bank had contravened the Anti-Money Laundering and Counter Terrorism Financing Act 2006 more than 53,000 times, after it failed to report cash transactions worth $625 million to the financial intelligence agency.

AUSTRAC slapped the bank with an additional 100 allegations just three months later, with CBA denying the majority of the fresh allegations in a submission to the Federal Court.

In June 2018, the Commonwealth bank settled the civil proceedings brought against it by AUSTRAC for $700 million, as well as AUSTRAC'S legal costs of $2.5 million - almost double what it had provisioned for the case.

The fine represents the largest ever penalty in Australian corporate history, however, that is likely to be surpassed by Westpac - expected to cough up $1.5 billion over its own money laundering scandal that involved more than 23 million money laundering breaches.

While AUSTRAC's civil proceedings were otherwise dismissed at the time, the bank admitted it had contravened the anti-money laundering act, including contraventions in risk procedures, reporting, monitoring and customer due diligence.

At the time, CBA chief executive Matt Comyn apologised on behalf of the bank.

"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," he said.

"We are committed to build on the significant changes made in recent years as part of a comprehensive program to improve operational risk management and compliance at the bank."

As of June 2018, the bank had spent over $400 million on systems and processes relating to AML/CTF compliance, Comyn said, as well as hiring senior leaders to oversee financial crime compliance.

At the time, Comyn said the bank had pivoted its approach to risk management, recognising the importance of non-financial risks.

"These changes are part of a large and concerted effort to become a better, stronger bank - one that earns the trust of our customers, staff, regulators and shareholders," he said.

Comyn became the chief executive of the bank in April 2018, after Ian Narev retired from his role amid AUSTRAC's money laundering scandal after six years in the role.

Read more: AUSTRACCommonwealth BankMatt ComynAnti-Money Laundering & Counter Terrorism Financing ActIan NarevWestpac
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