CBA could face litigation amid reported ASIC probe

Last June, the Federal Court approved a settlement between CBA and financial intelligence agency AUSTRAC that would require the bank to a pay a civil penalty of $700 million after it admitted to contraventions of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006, including contraventions in risk procedures, reporting, monitoring and customer due diligence.

It has been reported that CBA is now under investigation from the Australian Securities & Investments Commission (ASIC) in relation to alleged disclosure breaches associated with AUSTRAC’s money laundering case.

According to reports, ASIC has issued notices to interview former and present high-level CBA employees, including chair Catherine Livingstone and former CBA CEO Ian Narev.

A Commonwealth Bank spokesperson acknowledged to Mortgage Business that the bank was working with the corporate watchdog on an ongoing basis but declined to comment on the matter.  

“CBA continues to engage with ASIC regarding a number of matters and responds to requests made by the regulator,” a spokesperson told Mortgage Business.

“We won’t be commenting on any individual matter.”

Mortgage Business also reached out to ASIC for confirmation of its reported CBA investigation, but the regulator remained tight-lipped.   

“ASIC never comments on operational issues and that includes whether we are interviewing certain individuals,” a spokesperson said.

Background information

In her appearance before the banking royal commission last November, Ms Livingstone faced questioning from counsel assisting Rowena Orr regarding the bank’s handling of the AUSTRAC case.

Ms Orr asked why there was no reference to any director challenging management on the contents of the regulatory report in an October 2016 board meeting.

Ms Livingstone insisted that she challenged the AUSTRAC notices and received assurances by management in response to the challenge despite there being no record of any such challenge in the CBA minutes. 

CBA CEO Matt Comyn, however, conceded before the commission that the bank had “a lack of understanding of its obligations and did not properly appreciate the gravity of its failures to comply with those obligations”, adding that such failures led to contraventions of the anti-money laundering laws.

ASIC’s reported investigation follows recent criticism levelled at the corporate regulator from Commissioner Kenneth Hayne, who accused ASIC of favouring external dispute resolutions over litigation.

Following the release of the commission’s final report, ASIC chair James Shipton committed to revising its strategy through the implementation of a “why not litigate” stance.

[Related: PM wants people to ‘face consequences’ for misconduct]