AGS helped AUSTRAC on largest civil penalty in Australian corporate history
On 4 June 2018, an agreement was reached between the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Commonwealth Bank of Australia (CBA) for a $700 million penalty to resolve Federal Court proceedings relating to serious breaches of anti-money laundering and counter-terrorism financing laws. The case involved the misuse of bank channels and products by sophisticated money laundering syndicates and customers assessed as posing a possible terrorism or terrorism-financing risk.
The parties will jointly approach the Federal Court seeking orders to this effect. It is anticipated that a hearing on penalty will be scheduled in the coming months. If agreed by the Federal Court this will represent the largest ever civil penalty in Australian corporate history.
AGS Senior Executive Lawyer Sonja Marsic advised from the start on the investigations. We then advised on the strategy for enforcement options. Once it was decided we would institute proceedings, we drafted the statement of claim and ran all aspects for AUSTRAC.
AUSTRAC's enforcement action against CBA followed exhaustive investigations into CBA's compliance and risk management practices, particularly regarding its Intelligent Deposit Machines (IDMs).
In reaching the agreement, CBA admitted it had contravened the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) on 53,750 occasions.
In summary, CBA accepted that it failed to provide 53,506 threshold transaction reports to AUSTRAC on time for cash transactions of $10,000 or more through IDMs from November 2012 to September 2015, having a total value of about $625 million; for a period of 3 years it did not comply with the requirements to monitor transactions on 778,370 accounts; it failed to report suspicious matters on time, or at all, involving transactions in the tens of millions of dollars; and even after it became aware of suspected money laundering or structuring on CBA accounts, it did not monitor its customers to mitigate and manage the risk.
AUSTRAC's CEO, Nicole Rose PSM said this outcome sends a strong message to industry that serious non-compliance with the AML/CTF Act will not be tolerated. 'As we have seen in this case, criminals will exploit poor business practices to launder the proceeds of their crimes,' Ms Rose said.
Ms Rose thanked contributions from AGS and counsel, including Sonja Marsic and Simon White, SC.