The 'unemployed' guy who banked $900,000, and 8 other jaw-dropping claims in the case against CBA

Photo: Peter Parks / AFP / Getty Images.

Australia’s financial intelligence and regulatory agency, AUSTRAC, has lodged a 583-page statement of claim to back its court action against the Commonwealth Bank alleging breaches of anti-money laundering regulations.

CBA was last week was taken to the Federal Court for alleged breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act involving combined cash deposits of $624.7 million.

The bank says the problem, which potentially could see Australia’s largest company facing massive fines, started with a simple software update with its ATMs.

The case mostly centres on the use of smart ATMs introduced by the bank in 2012 which can allow up $20,000 in cash deposits.

In theory, CBA could face fines of up to almost $1 billion. The late lodgement of a transaction report carries a penalty of up to $18 million for each breach, and there are more than 50,000 instances alleged. By way of comparison, Tabcorp was fined $45 million for just 108 breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act.

The allegations within AUSTRAC’s 583-page statement of claim include:

  • AUSTRAC saying 53,506 contraventions of regulations where cash deposits of $10,000 or more have to be reported. This adds up to combined cash deposits of $624.7 million between November 2012 to September 2015.
  • While the bank’s electronic surveillance of the ATMS was out of action, many branch staff were alert, reporting suspicious deposits across Australia. In most cases, by the time action was taken, the people using accounts using fake names had moved on, the cash already moved offshore. In one instance, bank branch staff reported on December 17, 2014, seven cash deposits just under $10,000. Funds were then transferred to a third party account. The incident wasn’t reviewed by the CBA until March 9, 2015.
  • The Australian Federal Police used search warrants to get data from the CBA about individual accounts. At least one of these warrants was related to an investigation into “serious criminal offences including drug importation”.
  • Even when automated transaction alerts hit the system, it often took time for the bank to investigate. In one example, it more than six months to look into a man who deposited $798,105 in 89 cash deposits and then transferred $806,312 to other Australian accounts in 21 separate transactions.
  • One man, whose occupation was recorded as “unemployed”, made 117 cash deposits totalling $913,080 between July 2014 and January 2015.
  • About $20.59 million in cash was deposited through ATMS into 30 accounts, 29 of which were in fake names. Most of this cash was then transferred offshore.
  • In another case, 1,770 cash deposits totalling $14.33 million were made into 16 accounts, 15 of which were in fake names. A lot of this cash ended up in Hong Kong.
  • On April 5, 2016, a man came into the Auburn branch of the Commonwealth Bank in Sydney with $158,563 cash and distributed the funds between seven accounts. The activity was reported more than a month later on May 19.
  • Even after action was taken by the bank to terminate an suspicious account, money was still sometimes accepted. In one instance, another $318,530 was deposited into the account and $315,531 moved to other domestic accounts after the account had been closed.

Catherine Livingstone, the chair of the Commonwealth, announced today that short term bonuses for senior executives including CEO Ian Narev would be axed.

“The overriding consideration of the Board was the collective accountability of senior management for the overall reputation of the group,” says Livingstone.

Livingstone, who has only been chair of the Commonwealth since January this year, says Narev “retains the full confidence of the board”.

Here, according to AUSTRAC, are some of the transactions made on one suspicious account:

Source: Statement of Claim by AUSTRAC

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.