Austrac adds to Commonwealth Bank ‘failures’ file

Austrac will today hit the ­CBA with ­a further 100 ­allegations of serious failures to report suspicious transactions.

CBA last night filed its long-awaited defence, admitting to breaching anti-money-laundering legislation 53,506 times, but said it would defend numerous claims brought against it.

Anti-money-laundering agency Austrac will today hit the ­Commonwealth Bank with ­a further 100 ­allegations of serious failures to report suspicious transactions, after alleging in August that the bank had broken the law on more than 53,000 occasions.

Lawyers for Austrac were last night putting the final touches on an amended statement of claim against the nation’s largest bank, which will be filed in the Federal Court early today.

CBA last night filed its long-awaited defence, admitting to breaching anti-money-laundering legislation 53,506 times, but said it would defend numerous claims brought against it, relating to the number of times it is alleged to have failed to comply with suspicious transaction rules and ongoing due diligence of customers.

Austrac’s 600-page statement of claim in early August alleged the lender breached anti-money-laundering and counter-terrorism financing laws by failing to monitor properly tens of thousands of transactions through its smart ATM network.

The intelligent deposit ­machines were rolled out in 2012 without proper coding that would automatically send legally ­required reports for cash transactions of more than $10,000 to the regulator.

The lawsuit, which drew stinging criticism from Treasurer Scott Morrison, has shaken the nation’s biggest bank. It also prompted the early exit of then chief executive Ian Narev, while all of the bank’s top managers were stripped of their bonus payments.

A major shareholder class ­action is also under way and the banking regulator has launched a review of the bank’s culture.

Austrac has now uncovered more alleged failures at the bank. A statement released by CBA ­yesterday said Austrac had ­indicated that it proposed to file an amended statement of claim ­containing “additional alleged contraventions” of anti-money-laundering and counter-­terrorism financing laws. Although the bank agreed with allegations that it failed to put its intelligent deposit machines through a proper risk assessment, it disputed Austrac’s claim that it amounted to eight separate breaches of the anti-money-laundering act.

CBA also admitted to failing to adhere to transaction-monitoring requirements for “certain ­affected accounts”.

“If an amended claim is served on us, we expect the court would set a timetable for CBA to file an amended defence,” CBA said. “We will provide market updates as appropriate. We take our anti-money-laundering and counter-terrorism financing obligations extremely seriously. We deeply regret any failure to comply with these obligations. CBA is accountable for those deficiencies.”

CBA confessed to breaches relating to 91 allegations it failed to comply with laws relating to suspicious matter reports, but will contest in court a further 83 allegations. Likewise, the bank will defend 19 allegations concerning a failure to conduct ongoing due diligence of its customers, but has admitted to 52 breaches of the rules.

CBA had until tomorrow to file its defence. Austrac was originally given until mid-March to respond to the bank’s defence. A subsequent case-management hearing has been scheduled for April 2, however, Austrac’s amended statement of claim may complicate matters. CBA is estimated to have already set aside about $100 million for the legal case and regulatory compliance stemming from Austrac’s claims.

Along with the Federal Court case, the bank is facing what could be Australia’s largest shareholder class action, as foreshadowed by law firm Maurice Blackburn. It is also under investigation by the Australian Securities & Investments Commission over concerns it breached its disclosure obligations.

It is also undergoing an inquiry into its governance and culture by the prudential regulator APRA, and has confirmed it is in talks with foreign regulators, including those in the US.

The Austrac claims also contributed to momentum for the government’s recently announce royal commission into the financial sector.