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Commonwealth Bank admits to money-laundering in response to AUSTRAC

14 December 2017

The bank late on Wednesday filed its defence to AUSTRAC's initial allegations - made in August - admitting it was late filing 53,506 reports on transactions due to a systems error and that it did not adequately adhere to risk assessment requirements for automated deposit machines.

It denied that this amounted to eight separate contraventions, but agreed it did not adhere to all transaction monitoring requirements relating to certain affected accounts. These are reports made for transactions below the $10,000 threshold for mandatory reporting, but which Austrac says should still have raised suspicions within the bank.

CBA said it assessed anti-money laundering and terrorism financing risks of its machines in July 2015 and subsequently in 2016 and October 2017, and determined the risks as "high". "CBA is accountable for those deficiencies".

In October, law firm Maurice Blackburn and litigation funder IMF Bentham filed a statement of claim in the Federal Court in Melbourne saying the CBA board knew of potential breaches in the second half of 2015 and failed to inform shareholders for two years.

CMC Markets chief market strategist Michael McCarthy said the outlook for CBA still depended on how AUSTRAC pursues the case.

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But it has denied a string of allegations relating to suspicious matter reports and claims it failed to carry out customer due diligence requirements.

The breach of statutory laws brought to light by AUSTRAC earlier this year has exposed CBA to the possibility of multi-million dollar fines, more than 100 of which it is set to defend itself from in March next year.

"CBA accepts that the failure to issue TTRs and SMRs in accordance with the act has deprived law enforcement agencies of some additional intelligence", it said.

CBA has put in place a number of initiatives to combat financial crime, including employing over 260 compliance and risk experts in this area; launching an upgraded financial crime technology platform to monitor accounts and transactions for suspicious activity; and introducing as enhanced digital electronic customer verification processes to supplement face-to-face identification.

At midday, CBA shares were down 0.4 per cent to $79.995.

Commonwealth Bank admits to money-laundering in response to AUSTRAC