The Commonwealth, Australia’s biggest bank, has estimated the dollar cost of major bank inquiries and the money laundering scandal at more than half a billion dollars.
CBA today announced a provision of $375 million for a civil penalty in the money laundering scandal case brought before the Federal Court by AUSTRAC, Australia’s financial intelligence and regulatory agency.
“This takes into account currently available information, including legal advice received by the Group in relation to AUSTRAC’s claims,” it says in a note to its accounts.
The money laundering scandal involves CBA’s smart ATMs and deposits by criminal syndicates running into hundreds of millions of dollars.
And then the bank has made a $200 million provision for expenses relating to currently known regulatory, compliance and remediation program costs, including the Financial Services Royal Commission.
The bank announced the provisions when posting its half year results showing cash profit of $4.735 billion, down 1.9%. The provisions meant the bank missed expectations of about $5.2 billion.
“We have taken a significant provision for regulatory and compliance costs, consistent with accounting standards,” says outgoing CEO Ian Narvev.
“We recognise, and regret, that these costs arise from our failure to meet some standards that we should have. We will continue to work hard to do better.”
Australia’s major banks face 15 different major inquiries, including a royal commission, following a series of scandals involving giving poor financial advice to customers.
Here is CBA’s update on its work to strengthen regulatory compliance: