The Commonwealth Bank of Australia (CBA) has formally agreed to a record fine of A$700 million ($529.3 million) in the hopes of bringing to an end the money laundering scandal that it has found itself wrapped up in. The fine marks the largest ever handed out in Australian corporate history — and nearly doubled the amount the CBA had thought it would be paying for the infractions.
Fine aside, however — according to Reuters reports, CBA shares rose 1.5 percent in afternoon trading because as large as the fine was, investors were concerned it was going to be even higher.
It is the second major case new CEO Matt Comyn has settled with regulators in a month, following an admission of rate manipulation. The bank specifically copped to disobeying money laundering rules and terror financing law — not one, not twice, but 53,750 times.
Suspicious transactions were repeatedly not reported, and monitoring processes failed, it said.
“The money laundered through the CBA accounts included the proceeds of drug and firearms importation and distribution syndicates — predominantly involving methamphetamine,” the court document said.
CBA also failed to adequately notify the regulator of a wide swath of transactions that posed “a potential risk of terrorism or terrorism financing.”
The high fine was still something of a bullet dodge, since each individual breaking of the law could have been fined at least A$21 million each, exposing CBA to fines running into the billions of dollars.
“While we had not factored in a fine above $375 million, given a wide variety of potential outcomes, we note that many in the market had expected a fine as large as $1 billion,” UBS said in a note to clients.
The breaches were first revealed in August last year.
At the time, CBA blamed them on a computer error — but the case triggered a share selldown and a board shake-up, with Ian Narev announcing his retirement two weeks later amid a public outcry.
“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” new CEO Comyn said in a statement. “Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward.”
Australian Treasurer Scott Morrison told reporters it was now time for CBA to “get on with the job of restoring trust”.