Australia's largest lender admitted to some shortcomings in its AML and terrorism financing controls but also contested a number of other claims against it.

Scandal-hit Commonwealth Bank of Australia, criticised by Australian authorities for failings over money laundering and terrorism financing controls, yesterday admitted to a number of allegations while also contesting others.

“We take our anti-money laundering and counter-terrorism financing (AML/CTF) obligations extremely seriously. We deeply regret any failure to comply with these obligations. CBA is accountable for those deficiencies,” it said.

The lender responded to civil proceedings commenced by Austrac on 3 August 2017. It said it admitted allegations including those relating to the late submission of 53,506 threshold transaction reports, which were all caused by the same single systems-related error. That error equated to 2.3 per cent of the TTRs reported by the bank to the regulator between 2012 and 2015. It also agreed it did not adequately follow risk assessment requirements for Intelligent Deposit Machines. CBA admitted 91 (in whole or in part) but denied a further 83 of the allegations concerning suspicious matter reports (SMRs); it admitted 52 (in whole or in part) but denied a further 19 allegations concerning ongoing customer due diligence requirements.

The bank said it continued to fully cooperate with Austrac over anti-money laundering and terrorism financing control matters; it continues to share information with that regulator, it said in a statement filed with the Australian Stock Exchange.

The statement noted that Austrac has indicated that it proposes to file an amended statement of claim containing additional alleged contraventions.  

The problems have rocked the bank and hit its share price when claims surfaced late in the summer of this year. Litigation financier IMF Bentham said it would fund the class-action case against Australia’s largest lender. The firm accuses CBA of making false and misleading statements and failing to disclose breaches of anti-money laundering rules for years. Its lawsuit is separate to one filed by Austrac on 3 August, which triggered a vicious slide in CBA’s share price and left it exposed to potentially billions of dollars in fines. The price sank to as low as around A$73 per share, down from about A$83 per share at the start of the year, and has recovered in recent weeks to above A$80.

During the period of the claims made against it, CBC said it has submitted more than 36,000 SMRs, including 140 in relation to the syndicates and individuals referred to in AUSTRAC’s claim. “In the same period we submitted more than 17 million reports in aggregate, including SMRs, TTRs and in respect of international funds transfer instructions. CBA will submit over 4 million reports to AUSTRAC in this year alone,” it continued. 

“CBA also responds to large numbers of law enforcement requests for assistance each year, including approximately 20,000 requests this year. Some of the information provided directly resulted in disrupting money laundering and terrorism financing activity and prosecuting individuals,” it said. 

Changes at CBA
Ian Narev, chief executive, is retiring at the end of this year.

This news service reported in September, meanwhile, that the chief executive of its wealth management unit, Annabel Spring, was leaving in December. According to the statement at the time, Spring “has decided to leave” following the bank's announcement that it will sell off its Australian and New Zealand life insurance business to Asia-focused insurer AIA Group for A$3.8 billion ($3.1 billion), the bank said. 

Michael Venter, chief financial officer of International Financial Services, was in September appointed chief operating officer of CBA's wealth management arm. He is working on any organisational change resulting from Spring’s departure.