Austrac alleges CBA in 'serious' breach of money laundering act

http://www.smh.com.au/business/banking-and-finance/austrac-alleges-cba-in-serious-breach-of-money-laundering-act-20170803-gxoirw.html

We gave tapes to NSW POLICE re these activities where a NAB operative was boasting the methods used.......................IN 2003.  Glad its finally all coming out.  Imagine if we broke the law 53,000 times??????  Major banks in this up to their eyeballs.

Commonwealth Bank failed to inform regulators about suspicious cash deposits in its ATM network, in which money-laundering syndicates moved tens of millions of dollars through the bank, Austrac has alleged.

Austrac, the government's financial intelligence unit, said on Thursday it was taking action against CBA, alleging "serious and systemic non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing Act.

The action alleges more than 50,000 contraventions of the act, mainly through intelligent deposit machines (IDMs), a type of ATM that allows anonymous cash deposits. 

Austrac alleges millions of dollars were put into the machines by money-laundering syndicates, with some of the cash sent offshore, and some of the accounts connected with drug smuggling.

It says CBA was too slow to report 53,506 transactions of more than $10,000, the threshold at which banks must report cash transactions to authorities, and did not carry out an anti-money-laundering risk assessment before rolling out the ATMs in 2012.

In a statement on Thursday, CBA acknowledged that the civil proceedings had been brought and said it would have more to say on the specific claims "in due course".

A statement of claim filed in the Federal Court referred to at least four different money-laundering syndicates that are alleged to have used CBA ATMs, but allege the bank failed to report suspicious activity as required.

"It is essential to the integrity of the Australian financial system that a major bank such as CommBank has compliant and appropriate risk-based systems and controls in place to deter money laundering and terrorism financing," the statement said.

"The effect of CommBank's conduct in this matter has exposed the Australian community to serious and ongoing financial crime."

$10,000 threshold

Austrac alleges much of the suspected money laundering that occurred through CBA's ATMs was done with deposits of just under $10,000, and CBA identified the suspicious patterns of activity but repeatedly failed to report them to authorities.

CBA is also required to monitor customers with a view to spotting money laundering or terrorism-financing risks, but the bank failed to do this as well, Austrac alleges.

Even when suspected money laundering was brought to the bank's attention, Austrac alleges CBA did not monitor customers at risk of money laundering. Some customers were allowed to make suspicious transactions after the bank had given 30 days' notice that it intended to terminate their accounts, it alleges.

The effect of CommBank's conduct in this matter has exposed the Australian community to serious and ongoing financial crime.

Austrac

Lost proceeds of crime

The bank's failure to report $10,000 deposits on time, pass on its suspicions, and monitor suspicious customers had deprived law enforcement agencies of intelligence and evidence, and allowed further money laundering and lost proceeds of crime, it says.

Austrac's acting head, Peter Clark, said the court action followed an investigation into CBA's compliance, particularly relating to its use of IDMs.

"By failing to have sound AML/CTF [anti-money-laundering/counter-terrorism financing] systems and controls in place, businesses are at risk of being misused for criminal purposes," Mr Clark said.

"Austrac's goal is to have a financial sector that is vigilant and capable of responding, including through innovation, to threats of criminal exploitation."

Potentially massive fine

CBA potentially faces a massive fine as each contravention carries a $18 million penalty under current legislation.

The bank said it took its regulatory obligations "extremely seriously". It had been in talks with Austrac for an "extended period" and had fully co-operated with the agency's requests.

"On an annual basis, we report over 4 million transactions to Austrac in an effort to identify and combat any suspicious activity as quickly and efficiently as we can," the bank said.

The action against CBA comes after gaming giant Tabcorp paid $45 million to settle a money-laundering case with Austrac in February.