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Major bank to dispute rate-rigging allegations

Major bank to dispute rate-rigging allegations

The country’s largest mortgage lender will challenge ASIC’s claims against it in relation to trading that allegedly affected the bank bill swap rate.

In a trading update this week, CBA announced that it is reviewing details of the Statement of Claim lodged by ASIC against it in relation to trading allegedly affecting the bank bill swap rate (BBSW) on six occasions in 2012.

“The Commonwealth Bank disputes the allegations made by ASIC as we do not believe our employees have engaged in unlawful conduct, nor have they done anything that would have adversely impacted the efficiency and integrity of financial markets as alleged, or at all,” the bank said.

“The Commonwealth Bank has cooperated fully with ASIC’s investigation and we will look to constructively engage with ASIC in order to resolve this matter. As the matter is before the court, it would not be appropriate to comment further at this time.”

CBA has also rejected 89 of the 100 additional charges filed by AUSTRAC relating to the bank’s alleged breaches of the AML/CTF Act.

In a document lodged with the Federal Court on Friday (23 February), the Commonwealth Bank of Australia (CBA) denied most of the 100 charges in the Australian Transaction Reports and Analysis Centre’s (AUSTRAC) amended statement of claim filed in December 2017.

CBA denied in full 89 of the 100 new allegations relating to breaches of the anti-money laundering/counter-terrorism funding regime, and it admitted 11 allegations in part.

Responding to the AUSTRAC allegations, CBA agreed that it was late in filing 53,506 threshold transaction reports.

However, the bank said that it would ask the court to treat all 53,506 contraventions as a “single course of conduct”. This is somewhat unsurprising, given that if the bank were to be charged the maximum penalty for each of the 53,800 breaches, it could be fined more than $1.1 trillion.

CBA also admitted that it did “not adequately adhere to risk assessment requirements” for its intelligent deposit machines, which were used by criminals to launder cash overseas. However, it said that it “did not accept that this amounted to 14 separate contraventions”.

“We agree that our transaction monitoring did not operate as intended in respect of a number of accounts between October 2012 and October 2015,” the bank said.

CBA announced a cash profit of $4.7 billion for the half-year to December 2017, down by 1.9 per cent on the prior corresponding period.

Ongoing scandals were the primary drag on CBA’s result, as the bank set aside $375 million for expected penalties relating to the AUSTRAC allegations and an additional $200 million for ongoing regulatory costs.

“We have had a lot of activity relating to the world of regulation and compliance,” CEO Ian Narev said.

“We need to be clear that we brought on ourselves a lot of the additional activity we have had to do by not reaching standards that others expect of us or indeed that we expect of ourselves,” Mr Narev said. “That has had reputational consequences and financial consequences.”

[Related: Non-banks growing ‘80% faster than system’: CBA]

Major bank to dispute rate-rigging allegations
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