An estimated $5 million in drug money is being laundered through Australia’s big four banks each day.
The figure comes from confidential briefings by federal and state policing agencies cited by Fairfax Media.
While recent attention has been focused on the Commonwealth Bank and allegations of money laundering through ATMs, Westpac, the ANZ and NAB are reportedly also being investigated over the claims.
The CBA is facing legal action over alleged breaches of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act involving cash deposits of $624.7 million.
Financial services industry regulator Australian Prudential Regulation Authority has since announced a three-member panel for its inquiry into the governance, culture and accountability at the Commonwealth Bank.
Meanwhile police also suspect that crime syndicates have infiltrated the franchises of mid-tier banks.
Experts suggest the failure to carry out basic due diligence will likely place these financial institutions in breach of “know your customer” requirements.
Fairfax cites the case of Hong Kong resident Peter Li, who on February 14, 2014, made 17 deposits of $9500 or less, at 11 different bank branches – just under the trigger for banks to inform Austrac.
This incident occurred 10 weeks after Li was charged with money laundering offences and released on bail with the condition that he deposit no more than $2000 into an Australian bank account.
It wasn’t until a CBA teller asked Li for his name and called police after he refused, that it emerged he’d deposited $289,000 in drug funds in two days.
While the government’s proposed toughening of company director identification laws and whistleblower provisions are welcome, there has been one key downfall: the laws prohibit the banks from telling customers they have been reported to Austrac.
The law is designed to stop banks tipping off customers, but in one instance, a launderer was reported 100 times by a single bank for making 100 suspicious deposits.
“This has turned an anti-money laundering law into a ‘money laundering’ law,” expert John Chevis told Fairfax.
ANZ told Fairfax its anti-money laundering controls were effective, while Westpac said it was investing heavily in verifying customer identities. The NAB’s chief risk officer “people with bad intentions will always try to commit crime” and banks must always be vigilant.
Fairfax has more details.
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