CBA AUSTRAC money laundering debacle one step closer to resolution

Australian Financial Review Mar 22 2018 7:30 PM

James Frost

The money laundering debacle that saw Commonwealth Bank slapped with 53,000 breaches of the anti-money laundering and counter terrorism financing act is a step closer to a resolution after orders for mediation were made public.

Late Thursday evening an announcement published on the ASX stated orders for mediation had been made by the Federal Court.

The statement said mediation was to take place by May 25. It also required AUSTRAC to file and serve a reply to CBA's amended defence by April 6 and set out a timetable for proceedings in the event mediation was not successful.

Commonwealth Bank revealed at its half-year result in February that it had set aside $375 million in provisions to bring the matter to a conclusion. Commonwealth Bank does not believe the 53,000 breaches should be considered as individual breaches as it says they emanated from the same systems error.

Hopes for a quick resolution appeared to be dashed in August last year when Australia's financial intelligence regulator AUSTRAC doubled down on its claims of widespread breaches across the bank's network of intelligent deposit machines in August last year when it added a further 100 breaches to its original allegations.

Commonwealth Bank's claim the former head of AUSTRAC Paul Jevtovic reneged on a deal over the breaches is believed to have inflamed the situation and angered the regulator however the orders for mediation appear to indicate the two parties have finally found some common ground.