The Commonwealth Bank of Australia has been taken to the Federal Court, with authorities claiming it breached the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act over combined cash deposits of $624.7 million.
The civil proceedings follow an investigation by Australia’s financial intelligence and regulatory agency, AUSTRAC, into the use of intelligent deposit machines which, it is claimed, became the outlet of choice for criminal syndicates to shift offshore cash from drug deals.
These machines can take up to 200 notes — a maximum of $20,000 at a time — as a deposit. There is no limit to the number of transactions a customer can do in a day but cash can only be deposited in a Commonwealth account.
Cash banking transactions of $10,000 or more must be reported to Austrlian authorities. The case centres around tens of thousands of alleged breaches of this requirement.
The bank has acknowledged the proceedings and says it has been co-operating with AUSTRAC in the investigation.
According to papers filed in the court, one crime syndicate deposited $27.2 million in one account and most of this was immediately transferred offshore. Austrac says the money was proceeds from drug sales.
Peter Clark, AUSTRAC’s acting CEO, says the action should send a clear message to all reporting entities about the importance of meeting their obligations.
“By failing to have sound AML/CTF systems and controls in place, businesses are at risk of being misused for criminal purposes,” Clark said.
“AUSTRAC’s goal is to have a financial sector that is vigilant and capable of responding, including through innovation, to threats of criminal exploitation.”
“We believe this can be achieved by working collaboratively with and supporting industry. We will continue to work in this way with our industry partners who also share this aim and demonstrate a strong commitment to it.”
AUSTRAC alleges more than 53,700 contraventions and says the Commonwealth didn’t take steps to assess the risks of intelligent deposit machines until mid-2015, three years after they were introduced.
The banks is alleged to have failed to report on time 53,506 cash transactions of $10,000 or more, with a total value of $624.7 million, between November 2012 to September 2015.
AUSTRAC alleges that the bank failed to report suspicious matters either on time or at all involving transactions totalling more than $77 million.
Even after the bank became aware of suspected money laundering, it did not monitor its customers to mitigate and manage the risk, AUSTRAC alleges.
The Commonwealth today acknowledged the civil proceedings.
“We have been in discussions with AUSTRAC for an extended period and have cooperated fully with their requests,” the bank said. “Over the same period we have worked to continuously improve our compliance and have kept AUSTRAC abreast of those efforts, which will continue.”
The bank said it had invested more than $230 million in its anti-money laundering compliance and reporting processes and systems.
“We are reviewing the nature of the proceedings and will have more to say on the specific claims in due course,” the bank said.