State Street was handed a $1.25 million fine by AUSTRAC for allegedly breaching 99 times its obligation to report international transfers to the agency under Anti-Money Laundering and Counter-Terrorism Financing laws.
Under the law (section 45 (2) of the AML/CTF Act 2006), any person who sends or receives an instruction to transfer funds in or out of Australia must notify the AUSTRAC chief executive within 10 days of receiving the instruction.
State Street contravened 45(2) on 99 occasions in June 2008, according to AUSTRAC.
Each contravention carries a penalty of $12,600 for a body corporate for offences committed before 1 July 2020, taking its total bill to about $1.25 million.
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AUSTRAC has five main tools for enforcement action: getting civil penalty orders from the Federal Court, referring to the public prosecutor for possible criminal prosecution, enforceable undertakings, infringement notices and remedial directions.
For its action against State Street, AUSTRAC picked one of the milder tools - an infringement notice.
State Street has 28 days to pay the penalty to AUSTRAC.
The global asset manager said the "integrity of the transactions was not in question".
"We take our obligations under Anti-Money Laundering and Counter-Terrorism Financing legislation extremely seriously. There is no suggestion that the transactions in question were suspicious nor that there were deficiencies in State Street's customer due diligence," a spokesperson said.
"...This infringement notice relates to a failure to report certain incoming international funds transfer instructions, as required by AUSTRAC of financial institutions operating in Australia. We have been working with the regulator on this issue, having identified and self-reported the deficiencies in our IFTI reporting process.
"We have reviewed our IFTI reporting systems and controls and have worked with an independent consultant to develop a remediation plan to address the issue,"
It also said there was no business or financial impact to its clients.
In the past, AUSTRAC has used civil penalties against Westpac which has so far notified shareholders of more than $1 billion in expected total costs from the matter, Commonwealth Bank resulting in a $700 million settlement in June 2018 (AUSTRAC dropped the case late last month) and Tabcorp resulting in a $45 million penalty.