NAB investigated over potential financial crime breaches

NAB revealed on Monday (7 June) that it had received a letter from AUSTRAC, expressing concerns about the bank’s compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act 2006 and the AML/CTF Rules.

In the letter dated 4 June, the regulator wrote that there is “potential serious and ongoing non-compliance” with customer identification procedures, ongoing customer due diligence and compliance with part of NAB’s AML/CTF program.

AUSTRAC has referred the matters to its enforcement team, which has commenced a formal investigation into five reporting entities within the NAB group: NAB, JBWere, Wealthhub, Medfin Australia and AFSH Nominees.

The issues stem from both historical and contemporary compliance assessments, which were self-disclosed to AUSTRAC.

“In particular, the seriousness of self-disclosed matters presented to AUSTRAC over a prolonged period combined with the accompanying closure rates is concerning,” AUSTRAC’s letter stated.

The regulator is yet to make any decision about whether or not it will pursue enforcement action. At this stage, civil penalty proceedings are not on the table, due to the “work undertaken” by the bank, but AUSTRAC has warned the position could change.

The bank may face a range of enforcement actions, including civil penalty orders, enforceable undertakings, infringement notices and remedial directions.

NAB chief executive Ross McEwan commented that NAB will continue to cooperate with AUSTRAC.

“NAB takes its financial crime obligations seriously. We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do,” Mr McEwan said.

“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.”

NAB has acknowledged AML/CTF compliance issues across a number of public disclosures since 2017, most recently in NAB’s 2021 half-year financial report.

The bank has invested around $800 million to uplift its financial crime and fraud controls since June 2017 and has more than 1,200 staff dedicated to managing crime risks.

AUSTRAC acknowledged the significant investment in its letter, but despite the effort, the regulator has “ongoing concerns as to whether the NAB [group] has the necessary systems and processes to comply with its AML/CTF obligations”.

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