Commonwealth Bank chief admits bank made mistakes

COMMONWEALTH Bank chief executive Ian Narev has, in the wake of the bank’s shock money laundering charges, openly conceded the bank made mistakes.

CBA chief Ian Narev says there was no suggestion of money laundering intent or bad purpose by the bank or its staff. Picture: Hollie Adams/The Australian

COMMONWEALTH Bank chief executive Ian Narev has, in the wake of the bank’s shock money laundering charges, openly conceded the bank made mistakes.

In his first public comments since the disclosure on Thursday that Australia’s premier bank was being charged by regulator AUSTRAC, Mr Narev told the Herald Sun that CBA took “very seriously its responsibilities” in relation to these issues.

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He also said it took just as seriously the role the money laundering regulator played in keeping the public safe from ­financial crime.

The bank faces penalties which could, at least theoretically, add up to billions of dollars. All Mr Narev would say today was that it would “cost us what it will cost us”.

CBA is expected to make an announcement in relation to the large numbers that have been projected in the media.

The bank’s board will meet today and tomorrow ahead of the annual profit announcement on Wednesday. That is expected to reveal a record profit of just under $10 billion.

The board will also consider bonuses that would normally be paid to the CEO and management, and indeed their broader remuneration.

Mr Narev today said he had a “close relationship” with the relatively newly appointed chairman, Catherine Livingstone, and that he had informed her of the charges “within minutes” of being informed by AUSTRAC.

While conceding the bank had erred — the main trigger being a software glitch that had not been detected — Mr Narev stressed there was no suggestion of money laundering ­intent or bad purpose by the bank or its staff.

The key failure was in the mandatory threshold transaction reporting.

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At all times CBA continued to monitor and report to AUSTRAC suspicious transactions around the $10,000 trigger, he said. Mr Narev said CBA had invested $230 million in this area of money laundering ­prevention, and would invest a further $100 million over the next 12 months.

He rejected any assertion the problem arose because CBA’s “intelligent” ATMs ­allowed individual cash deposits of up to $20,000 — double the reporting trigger — or that they operated in “real time”.

While conceding it was a major “reputation issue” for CBA, he rejected any suggestion the bank had a cultural problem or that this proved the need for a royal commission into banking. And he said he fully intended to stay in his job.

Asked why only CBA had been charged, he said — and stressed that he was not speaking sarcastically — that maybe the other banks did everything perfectly. Or maybe AUSTRAC, with limited resources, was going through a process.