CBA won’t see enforcement action in AUSTRAC case

After concluding a lengthy investigation, ASIC has told the Commonwealth Bank of Australia (CBA) that it will not be taking any action in relation to its proceedings with the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The investigation included the bank’s disclosure of Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006 breaches and “whether directors and officers of CBA complied with specific obligations under the Corporations Act”, the bank said.

CBA paid a record $700 million penalty in 2018 to settle the matter with AUSTRAC.

A recap of the issues

In August 2017, Australia’s financial intelligence and regulatory agency initiated civil penalty proceedings in the Federal Court against CBA for “serious and systemic non-compliance” with anti-money laundering and counter-terrorism laws.

In a statement, AUSTRAC said that CBA had breached the AML/CTF Act.

AUSTRAC’s action alleged that CBA had more than 53,700 contraventions of the AML/CTF Act, after it conducted an investigation by AUSTRAC into CBA’s compliance, particularly regarding its use of intelligent deposit machines (IDMs).

The financial intelligence regulator said CBA did not comply with its own AML/CTF program, because it did not carry out any assessment of the money laundering and terrorism financing (ML/TF) risk of IDMs before their rollout in 2012. AUSTRAC alleges that CBA took no steps to assess the ML/TF risk until mid-2015, three years after they were introduced.

More breaches were later added to the charges, with the case entering mediation.

In June 2018, 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 the AML/CTF Act, including contraventions in risk procedures, reporting, monitoring and customer due diligence.

It was then announced last year that the Australian Securities & Investments Commission (ASIC) was looking into the alleged disclosure breaches associated with AUSTRAC’s money laundering case.

However, following an investigation, ASIC has now told the bank that it will not be taking any enforcement action into the matter.

The regulator has not yet issued a statement.

[Related: CBA could face litigation amid reported ASIC probe]