Australia’s financial intelligence agency has accused Commonwealth Bank of 53,700 breaches of anti-money laundering law. Austrac launched proceedings on a Thursday in early August 2017, and the bank could face huge penalties: up to A$18m for each alleged breach.
The trouble centres on the bank’s intelligent deposit machines. Austrac says criminal syndicates used them to launder money.
The technical detail matters. The machines take up to A$20,000 in cash per transaction, with no cap on how many deposits can be made in a day. They count the notes and credit the nominated account straight away, so the money can be moved on, at home or overseas, almost at once. Because the bank does not know who is feeding the machine unless the person is a customer, the deposits are anonymous.
What Austrac alleges
Between 2012 and 2015, Austrac says, the bank repeatedly missed deadlines to report cash transactions of A$10,000 or more. It puts the number at 53,506 transactions worth about A$624.7m in total. The agency also says the bank skipped a money-laundering and terrorism-financing risk assessment before rolling out the machines in 2012, and did not properly monitor accounts that might have used them.
There is more. Austrac alleges the bank failed, on time or at all, to report suspicious matters involving transactions of more than A$77m. These involved five criminal syndicates, two of them allegedly laundering drug proceeds. One was a “cuckoo smurfing” operation, a method that lets money move overseas without a cross-border transaction. In some cases, Austrac says, the bank kept failing to monitor accounts even after it knew of laundering concerns.
The bank’s response
At first, Commonwealth Bank said only that it was reviewing the proceedings. It said it had been talking with Austrac for an extended period and had cooperated fully. It also said it reports more than four million transactions a year to Austrac and had spent over A$230m on its anti-money laundering systems.
In December, the position hardened. In a defence filed with the Federal Court, the bank admitted being late in filing 53,506 transaction reports, which must reach Austrac within 10 days. It conceded it “did not adequately” assess the risks of the machine rollout and should have set daily limits and restricted certain cards. Those changes were made the previous month.
It denied a string of other allegations, including those on suspicious matter reports and customer due diligence. It is also arguing against fines that, by The West Australian’s reckoning, could run into the billions. “We regret any failure to comply with these obligations,” the bank said, adding that its information had already helped disrupt money laundering and terrorism financing.
Austrac also alleges that staff at machines in East Perth tried to alert senior officials about a questionable A$30,000 cash deposit made in April 2015. The warning was not acted on until the middle of June.
Sources
- Commonwealth Bank faces fines over anti-laundering laws
- Commonwealth Bank admits breaching anti-laundering laws
