On 3 August 2017, the Australian Transactions Reports and Analysis Centre (“AUSTRAC”) initiated civil proceedings against the Commonwealth Bank of Australia (“CBA”) for breaches in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (“the Act”). The case (Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v Commonwealth Bank of Australia Limited  FCA 930) was to be heard in the Federal Court of Australia. However, a settlement was agreed upon by the two parties prior to the commencement of the hearing. The Federal Court of Australia ordered the settlement to proceed as a civil penalty order against CBA on 20 June 2018. The agreed upon amount was one of the largest penalties ever to be ordered in any court for similar crimes all around the world.
The original case was based on allegations by AUSTRAC accusing CBA of 53,750 breaches of the Act, specifically in regards to the anti-money laundering and counter-terrorism financing provisions. Investigations were conducted in partnership with the Australian Federal Police and various state police forces and focused on CBA’s compliance and risk management practices, especially in regards to their Intelligent Deposit Machines (IDMs).
Although accepting several of the allegations that AUSTRAC had initially presented, CBA had originally presented a defence for their case by stating some of these breaches were due to a coding error that occurred in their systems. However, prior to the case being heard in the Federal Court, an agreement was reached by both parties for a settlement amount of $700 million.
In a Media Release on 4 June 2018, AUSTRAC said that:
“In summary, CBA accepted that:
This settlement amount was officially ordered by the Federal Court of Australia and the penalty was ordered on 20 June 2018.
Treasurer the Hon. Scott Morrison MP commented in a Media Release that:
“Complying with the law is non-negotiable, especially when it comes to our largest financial institutions that Australians rely on for their homes and businesses and the Government is serious about enforcing any breaches. Banks should be leaders in ensuring their systems cannot be compromised by criminals seeking to launder money or finance terrorist activities … This result will remind boards and managers of financial institutions across Australia that the Government is serious about maintaining a strong financial system where crime can't flourish.”
AUSTRAC has also been praised by Minister of Home Affairs Dutton, Treasurer the Hon. Morrison MP and Attorney-General Porter for their actions in enforcing this law and for their ongoing programs. Their importance in the role that they will continue to play in the protection of the wider community has also been acknowledged by the Government, as an additional $43.3 million in funding will be assigned to them over the next four years.
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Media Release: Joint Media Release with the Treasurer and Attorney-General - Record penalty agreed for breaches of money laundering and terrorism financing laws (Minister of Home Affairs, 04 June 2018)
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