The bank will pay the penalty after admitting to thousands of breaches of Australia’s anti money laundering laws.

By Daniel Herborn


Posted on June 20, 2018

The staggering fee will be the largest civil penalty in Australian history.

The bank agreed with regulators to pay the amount earlier in June 2018 after admitting to more than 50,000 breaches of the law. Today’s decision formally ends the proceedings against the bank.

Justice David Yates of the Federal Court commended the parties on coming to an agreement.

He said he considered the amount appropriate after considering multiple factors, including the bank’s size and financial position, the conduct of its board and senior managers, its previously unblemished record in this area and its contrition for the breaches.

He also said the amount would act as a significant deterrent to other banks and financial institutions bound by anti-money laundering laws.

“It marks the court’s strong disapproval of the bank’s conduct,” he said.

Prime Minister Malcolm Turnbull previously said the fine demonstrated the government and its regulatory agencies “will not tolerate wrongdoing” by financial institutions.

“Where it has occurred, we will ensure those who are responsible are held to account.”

What laws did the bank break?

The bank admitted to not making timely reports regarding transactions of more than A$10,000 made through its intelligent deposit machines (IDMS).

Banks are legally required to report such transactions to the Australian Transaction Reports and Analysis Centre (AUSTRAC) within 10 business days. AUSTRAC is the government financial intelligence agency responsible for monitoring transactions for possible money laundering by organised crime and terrorist organisations.

Other breaches of the law included failing to monitor transactions on more than 750,000 accounts to determine if money laundering red flags were present. The bank also admitted to either filing, or make late filings, on 149 suspicious matter reports.

Yet more breaches occurred when its system for monitoring suspicious customers and transactions was not compliant with the law on a number of occasions between October 2012 and October 2015.

Fallout from the scandal

The scandal resulted in former CEO Ian Narev leaving the bank and being replaced by Matt Comyn. The bank’s share price also slumped in the immediate aftermath.

The Australian Prudential Regulation Authority (APRA) also launched a prudential review of the bank’s governance in the wake of the systematic breaches coming to light. The review concluded that the bank’s “continued financial success dulled the senses of the institution”.

The penalty was almost double the amount the bank had previously set aside for the settlement.