Former CBA boss Ian Narev reveals bank expected wrist slap for AML breaches

Former CBA chief Ian Narev has told a court the bank had prepared for an $18m penalty and a co-operative approach from Austrac before the regulator hit it with $700m in fines.

Former CBA chief executive Ian Narev (left) leaving court after giving evidence. Picture: Jane Dempster

Former Commonwealth Bank boss Ian Narev has told a court he expected the bank to face fines of up to $18m for money laundering breaches – well below the $700m in penalties ultimate paid.

Appearing in the Federal Court on Tuesday, Mr Narev said the bank had expected it would be given notice of any Austrac action and had lobbied the regulator to put out a joint statement announcing enforcement action and an apology from the bank.

Mr Narev said the bank had prepared for possible outcomes after it revealed anti money laundering and counter terrorism financing breaches to Austrac, but only expected to face one charge.

Instead, CBA was hit with $700m in fines, while the Australian Prudential Regulation Authority forced the bank to hold an extra $1bn in capital on its books.

“We were pragmatic thinking we would be needing to have that discussion,” Mr Narev said.

Mr Narev is in court as part of a class action brought against CBA by Maurice Blackburn, which claims the bank failed to inform investors it was facing a massive fine over its failure to properly log transactions on its then new deposit cash machines.

The fine levied against CBA, at the time the largest civil penalty in Australian corporate history, triggered the departure of Mr Narev after the bank was revealed to have breached AML/CTF laws at least 53,750 times.

Federal Court judge David Yates has heard CBA was on notice with Austrac and APRA by the time it faced penalties, with the bank handing over repeated audits that showed its AML/CTF systems were not performing.

Jeremy Stoljar SC, acting for Maurice Blackburn, took Mr Narev to notices sent by Austrac, which said the regulator had not made a decision it was concerned CBA had acted in “bad faith”.

“You were of the view that proffering a monetary fine would assuage the concerns or could assuage the concerns that Austrac had ventilated to you,” he asked.

CBA argues it was not aware of the action Austrac would take, with documents showing Mr Narev was give 15 minutes notice of the charges from the regulator.