Australia’s largest mortgage lender — Commonwealth Bank of Australia — has been officially accused by its government of widespread violations of anti-money laundering and counter-terrorism financing rules.
“Serious and systemic non-compliance” with the rules — that is the allegation of AUSTRAC, the nation’s financial intelligence organization, in civil penalty proceedings in the Federal Court against CommBank. This marks the largest such case in Australia’s history.
“The effect of CommBank’s conduct in this matter has exposed the Australian community to serious and ongoing financial crime,” AUSTRAC said in a court filing.
Commonwealth Bank said in a statement it was reviewing the allegations and will file a statement of defense.
“We would never deliberately undertake action that enables any form of crime,” the bank said in a statement on Friday.
According to AUSTRAC, CommBank did not report suspicious matter within its walls “either on time or at all involving transactions totaling over A$77 million ($61 million).” All in all, the bank is accused of allowing 53,700 violations of the anti-money laundering and counter-terrorism financing act. Many of those instances involved IDMs (intelligent deposit machines).
Allegedly, the machines were used such that cash was deposited using fake names with proceeds going to drug importation syndicates. The bank was also accused of something called “cuckoo smurfing.” This variation on money laundering involves making transfers between countries without the need for money to actually cross international borders.
“Even after suspected money laundering or structuring on CommBank accounts had been brought to CommBank’s attention, CommBank did not monitor its customers with a view to mitigating and managing money laundering/terrorism financing risk,” the court filing shows.
CommBank, as maximum possible penalty for these violations, could be sentenced to pay A$18 million per breach.
As of now, AUSTRAC has no further comment on the legal issues facing CommBank — or as to whether or not any other banks could be facing similar charges.