ASIC drops Commonwealth Bank Austrac investigation

The decision removes a cloud over executives and directors, including chair Catherine Livingstone and CEO Matt Comyn.

CBA announced the outcome of the watchdog’s long-running investigation in an announcement late Wednesday to the ASX. Picture: AFP

ASIC will not take any action against Commonwealth Bank directors or executives after concluding its investigation into events surrounding Austrac’s 2017 claim against the bank.

CBA announced the outcome of the watchdog’s long-running investigation in an announcement late Wednesday to the ASX.

In a single-paragraph statement, the bank said it had been notified by the Australian Securities & Investments Commission on Wednesday that it had completed its probe in relation to matters raised in Austrac’s August 3, 2017 statement of claim.

“(The issues included) the disclosure of those matters and whether directors and officers of CBA of CBA complied with specific obligations under the Corporations Act,” the statement said.

The decision removes a cloud of uncertainty hovering over a generation of executives and directors, including current chair Catherine Livingstone and chief executive Matt Comyn.

Then-ASIC chairman Greg Medcraft told a parliamentary committee on August 11, 2017 that ASIC was investigating a number of areas in Austrac’s claim that CBA had breached anti-money laundering laws on 53,750 occasions in relation to the rollout of its intelligent deposit machines.

They included whether officers and directors had complied with their Corporations Act duties; whether CBA complied with its continuous disclosure obligations; whether the group complied with licensing obligations to act efficiently, honestly and fairly, and whether CBA had accurately reported its contingent liabilities.

While CBA paid a $700m penalty to settle the Austrac case in June 2018, ASIC continued its investigation into Corporations Act breaches.

Ms Livingstone gave controversial evidence to the Hayne financial services royal commission about the board’s conduct in relation to the Austrac matter.

The CBA chair said she had challenged the bank’s management about its AML reporting in an October 2016 board meeting, when she was a non-executive director.

When it was put to her that the minutes of the meeting did not record her concerns, Ms Livingstone said board minutes did not record every exchange.

“I did not receive a satisfactory answer to my challenge, because it did not accord with my understanding of Austrac,” she said in a statement to the royal commission.

“That response served to confirm the concern that I had been developing, based on my experience as a non-executive director, that management, at that time, did not have the capacity to respond to what was, clearly, an escalating, significant and serious systemic control challenge.

“Management did not have the capacity, either because they couldn’t or they wouldn’t.”

Mr Comyn was head of CBA’s retail bank at the time and had responsibility for the rollout of the intelligent deposit machines.

He was reporting to then-chief executive Ian Narev.

ASIC’s decision not to take any enforcement action has possible implications for its investigation into Westpac, also for AML breaches in an Austrac statement of claim lodged late last year.

Westpac remains in settlement discussions with Austrac over more than 23 million breaches.

The bank has made a $900m provision to cover any penalty, but the financial crime agency is believed to be asking for $1.5bn.