National Australia Bank and its subsidiaries, including JBWere, are allegedly failing their anti-money laundering and counter-terrorism financing obligations, according to AUSTRAC.
The financial intelligence agency is investigating NAB's "potential serious and ongoing non-compliance" with respect to customer identification procedures, ongoing customer due diligence, and its ability to comply with AUSTRAC's AML and CTF program.
NAB's subsidiaries JBWere, Wealthhub Securities (nabtrade), Medfin Australia and AFSH Nominees will also be investigated.
AUSTRAC said its concerns emanate from historical and new compliance assessments. This specifically pertains to self-disclosed matters presented to AUSTRAC over a prolonged period combined with the accompanying closure rates that is concerning.
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AUSTRAC acknowledged that NAB has invested significantly in programs to combat financial crime but it doubts that the bank has the necessary systems and processes to do so.
Since June 2017, NAB poured $800 million into its financial crime and fraud controls and has more than 1200 staffers working in this department.
"At this stage, AUSTRAC is not considering civil penalty proceedings to address AUSTRAC's concerns. This decision is reflective of the work undertaken by the NAB DBG to date. However, this position may be subject to change and you will be notified if that occurs," AUSTRAC's letter to NAB read.
AUSTRAC's enforcement team will now review the material provided by the bank.
NAB chief executive Ross McEwan said the bank will continue to cooperate with AUSTRAC in its investigations.
"It is a key priority for everyone at NAB to uplift our financial crime capabilities, minimise risk to customers and the bank, and improve operational performance. That's why we are so focused on getting the basics right every time to protect our customers and our bank," he said.