CBA-AUSTRAC case has investor implications

 http://www.financialobserver.com.au/articles/cba-austrac-case-has-investor-implications=

The scandal over misuse of Commonwealth Bank of Australia’s (CBA) ‘intelligent deposit’ machines, which will see the Australian Transaction Reports and Analysis Centre (AUSTRAC) allege that a lax approach by CBA allowed suspicious transactions valued at $625 million, was proof the authorities had known of the weaknesses for a long time, according to Victims of Financial Fraud (VOFF).

VOFF – which was formed by victims of the $180 million Trio Capital fraud – asserted the AUSTRAC case against CBA strengthened its claim that the Trio victims should receive an apology and compensation for their losses in a crime that financial regulatory agencies should have expected, VOFF secretary John Telford said.

“The AUSTRAC/CBA case has revealed that there were already known weaknesses in the system, which the law enforcement and banking communities already understood, that individuals starting up companies could deposit money with minimal scrutiny – even with false identification – and start sending millions of dollars overseas and do it quite easily,” Telford said.

“We believe that there should have been warnings informing investors and superannuation account holders about these very weaknesses, and that absence of these warnings represents a systemic failure of the Australian financial system.” 

The group was also concerned the CBA case was triggered by transactions passing through the bank’s ATM network that exceeded AUSTRAC’s $10,000 threshold, when the Trio Capital case involved a $50 million deposit “going past AUSTRAC without any hiccups” when the “same Anti-Money Laundering Act was in existence when Trio money was being moved”, he told financialobserver. 

Additionally, VOFF said it believed “double standards” existed in the way financial fraud was investigated, depending on whether the fraud was against ordinary citizens or against the government. 

“If you look at the recent Australian Taxation Office fraud case, the Australian Federal Police got on to that very quickly: they published diagrams showing where and how the companies were set up, and where the money went to, and they were quick to identify the proceeds of the crime, they had identified so many sports cars, luxury houses, boats, airplanes and so on,” Telford said. 

“But in the Trio case, there is nothing at all, they can’t seem to find anything.”

Given the compulsory nature of super, VOFF said it believed the time had come for explicit warnings to investors that criminal elements could gain access to the Australian banking and super systems and the savings of ordinary Australians.

“We have been complaining about the weaknesses in the financial system for quite some time, so what this recent episode has brought to us is just a reminder that the problems are still present and have not been addressed,” Telford said.