NAB enters enforceable undertaking over anti-money laundering controls

AUSTRAC had raised concerns around NAB’s adherence to anti-money laundering and counter-terrorism financing (AML/CTF) laws, after it kicked off its formal enforcement investigation in June.

The inquiry had looked into five of the bank’s entities: National Australia Bank Limited, JBWere Limited, Wealthhub Securities Limited, Medfin Australia Pty Ltd, and AFSH Nominees Pty Ltd.

The regulator had identified non-compliance in its assessments, as well as through self-diclosures from NAB.

However, AUSTRAC formed the view at the start of the investigation that a civil lawsuit was not appropriate.

In response, NAB has rolled out a remedial action plan, which it believes will improve its systems, controls and record-keeping, including its AML/CTF program, applicable customer identification procedures, customer risk assessment and due diligence, transaction monitoring and governance and assurance.

AUSTRAC will monitor NAB’s progress against its set time frames and maintain regular discussions with the bank.

An independent auditor is also set to report to AUSTRAC annually, with the final report to be provided by March 2025.

NAB chief executive Ross McEwan commented the bank takes its AML/CTF obligations “seriously” and that it further builds capacity, increases resourcing and works on modernising its systems, to improve its controls.

“We acknowledge the concerns that led to AUSTRAC’s investigation. We will continue to work closely with AUSTRAC as we deliver the agreed further actions,” Mr McEwan said.

“We recognise it has taken us longer to fix the concerns raised than it should have.”

A number of activities under the remedial action plan, such as improvements to NAB’s AML/CTF program, have already commenced and are expected to complete within the next 12 months.

NAB is currently assessing the costs of delivering the enforceable undertaking and is set to provide an update on its half-year results later this week.

The bank’s financial crime executive committee, which includes Mr McEwan and is chaired by NAB’s chief financial crime risk officer Paul Jevtovic, will oversee the program.

“Keeping criminals out of the financial system is a top priority for NAB. We recognise our opportunity to better detect, deter and disrupt the flow of illegal money at a time when the threat is evolving at an incredible rate,” Mr McEwan said.

AUSTRAC CEO Nicole Rose commented the enforceable undertaking will ensure NAB continues with its remediation programs.

“National Australia Bank has demonstrated a commitment to uplifting its AML/CTF controls, and has undertaken significant work identifying and implementing improvements to its programs,” Ms Rose said.

“NAB has worked collaboratively with AUSTRAC throughout the investigation, and this enforceable undertaking will help to ensure NAB meets its compliance and reporting obligations.”

Mr McEwan added: “We welcome AUSTRAC’s acknowledgement that NAB has undertaken significant work to date – and we accept there is more to do.”

Last year, AUSTRAC released its risk assessment of the major banks, which found the overall money laundering and terror financing risk for the industry is “high”.

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