AML/CTF compliance

On 4 June 2018, an agreement was reached between AUSTRAC, Australia´s Financial Intelligence Unit, and the Commonwealth Bank of Australia (CBA). The agreement stipulated a $700 million penalty relating to serious breaches of anti-money laundering and counter-terrorism financing (AML/CTF) laws.

The parties will jointly approach the Federal Court seeking orders to this effect, which would represent the largest ever civil penalty.

On its website, AUSTRAC highlights key points relating to the investigation, the specifics of CBA´s non-compliance and the wider implications of this activity.

 

Investigation into CBA’s AML/CTF compliance

AUSTRAC’s enforcement action against CBA followed exhaustive investigations into CBA’s AML/CTF compliance and risk management practices, particularly in relation to its Intelligent Deposit Machines (IDMs).

These investigations, undertaken in partnership with the Australian Federal Police, NSW Police Force and Western Australia Police, identified that CBA’s IDMs were being used to launder the illicit proceeds of crime.

 

Which CBA actions amounted to non-compliance?

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) is part of a legislative package which brings Australia into line with international best practice to deter money laundering and terrorism financing.

The Act covers the financial sector, gambling sector, bullion dealers and other professionals or businesses that provide services covered by the Act.

In reaching the agreement with AUSTRAC, the CBA admitted that it contravened the AML/CTF Act on 53,750 occasions, accepting that:

  • it failed to carry out an appropriate assessment of the money laundering and terrorism financing (ML/TF) risks of its IDMs prior to October 2017
  • it failed to complete the introduction of appropriate controls to mitigate and manage the ML/TF risks of IDMs prior to April 2018
  • it failed to provide 53,506 threshold transaction reports to AUSTRAC on time for cash transactions of $10,000 or more through IDMs from November 2012 to September 2015, having a total value of about $625 million
  • for a period of three years, it did not comply with the requirements of its AML/CTF program relating to monitoring transactions on 778,370 accounts
  • it failed to report suspicious matters on time, or at all, involving transactions in the tens of millions of dollars
  • even after it became aware of suspected money laundering or structuring on CBA accounts, it did not monitor its customers to mitigate and manage ML/TF risk, including the ongoing ML/TF risks of doing business with those customers.

 

ML/TF implications for the Australian community and businesses

AUSTRAC’s CEO, Nicole Rose PSM stated that money laundering and terrorism financing (ML/TF) “has real impacts on the everyday lives of Australians and puts the community at risk by increasing opportunities for terrorists to support attacks here and overseas, and enabling organised crime groups to peddle drugs to our families and friends.”

AUSTRAC´s stern action against CBA is therefore a warning sign to the financial sector that they need to take their AML/CTF obligations seriously, and that non-compliance will not be tolerated.

Nyman Gibson Miralis provides expert defence in complex money laundering cases, as well as a niche consultancy service to help companies achieve compliance with AML/CTF obligations.

Contact us if you require assistance.

Nyman Gibson Miralis provides expert defence in complex money laundering cases, as well as a niche consultancy service to help companies achieve compliance with AML/CTF obligations.

Contact us if you require assistance.