Image copyright EPA Image caption Australia's Commonwealth Bank has faced a series of scandals

Australia's Commonwealth Bank has said it will pay a $700m (£400m; $530m) fine for breaching anti-money laundering and counter-terror financing laws.

The scandal relates to 53,000 suspect transactions that the bank did not immediately report to authorities.

Last year, Australia's financial intelligence agency accused the lender of "serious and systemic" law breaches.

If a court approves the fine, it will be the largest civil penalty in Australian corporate history.

The bank, Australia's largest lender, said it would also cover A$2.5m in legal fees accrued by investigators.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made," chief executive Matt Comyn said on Monday.

Australia's scandal-plagued financial sector is at the centre of a national inquiry into misconduct.

Undeclared deposits

Commonwealth Bank and intelligence agency Australian Transaction Reports and Analysis Centre (Austrac) agreed to the fine following court-ordered mediation.

Most of the breaches related to the bank's deposit machines, which could accept up to A$20,000 in cash at a time, anonymously if the person depositing was not a Commonwealth customer.

The bank failed to meet deadlines for reporting transactions over the legal threshold of A$10,000, according to Austrac.

Commonwealth Bank said the breaches were due to a coding error, which meant the machines failed to automatically report the transactions.

On Monday, Austrac said the settlement agreement showed that such breaches would not be tolerated.

"This [corporate behaviour] has real impacts on the everyday lives of Australians and puts the community at risk by increasing opportunities for terrorists to support attacks here and overseas, and enabling organised crime groups to peddle drugs to our families and friends," said chief executive Nicole Rose.

Both parties will now return to the Federal Court of Australia to seek formal approval.

Scandal-hit sector

Australia's banking and financial services sector has been rocked by a series of scandals over the last decade.

In December, Prime Minister Malcolm Turnbull established a royal commission inquiry to investigate the scale of wrongdoing.

Among allegations to hit Commonwealth Bank, the inquiry heard that the lender had collected fees from customers it knew had died.

In May, the bank also admitted to losing the bank records of almost 20 million people.

The lender has also been investigated over whether it adequately informed shareholders about all potential liabilities related to the anti-money laundering case.

Former chief executive Ian Narev brought forward his retirement last year as the bank faced pressure over the scandal.</s>CANBERRA, Australia (AP) - The Commonwealth Bank of Australia says it has agreed to pay a 700 million Australian dollar ($531 million) fine for failing to comply with measures to prevent money laundering and terrorism financing.

Australia's largest bank said on Monday it had negotiated the fine with the Australian Transaction Reports and Analysis Center, the government's financial intelligence agency better known as AUSTRAC, to resolve a civil Federal Court case that began in August. The agreement is subject to court approval.

The bank admitted that it was late in reporting more than 53,500 suspicious transactions exceeding AU$10,000 ($7,581) between 2012 and 2015. Each offense was punishable by a fine of up to AU$21 million ($16 million).

The bank blamed a single software error in its deposit-taking automated teller machines.</s>CANBERRA, Australia -- The Commonwealth Bank of Australia, the nation's largest bank, said on Monday it had agreed to pay a 700 million Australian dollar ($531 million) fine for failing to comply with measures to prevent money laundering and terrorism financing.

The bank negotiated the fine with the Australian Transaction Reports and Analysis Center, the government's financial intelligence agency better known as AUSTRAC, to resolve a civil Federal Court case that began in August. The agreement is subject to court approval.

The bank has also agreed to pay AUSTRAC's AU$2.5 million legal costs.

The bank admitted that it was late in reporting more than 53,500 suspicious transactions exceeding AU$10,000 between 2012 and 2015. Each offence was punishable by a fine of up to AU$21 million.

The bank blamed a single software error in its deposit-taking automated teller machines and argued those violations should be treated as one rather than as a series of individual offences.

The suspicious transactions were conducted by people connected to the international drug trade and the bank suspected some transactions may have been associated with terrorism financing.

Matt Comyn, who became the bank's chief executive officer in April, said in a statement that court approval of the agreement would bring certainty to one of the most significant issues the bank faced.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made. Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologize to the community for letting them down," Comyn said.

The statement added that it would work closely with AUSTRAC on a constructive approach to combating financial crime and protecting the integrity of the financial system.

Home Affairs Minister Peter Dutton said the bank's disregard for its obligations allowed criminals to exploit its systems and put the Australian community at risk.

Treasurer Scott Morrison said that the Australian public expected the financial sector to better protect itself from exploitation by criminals and individuals associated with terrorist groups.

"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," Morrison said.</s>June 4 (Reuters) - Commonwealth Bank of Australia (CBA) said on Monday it would pay a penalty of A$700 million ($529.27 million) to settle money laundering charges brought by Australia's financial intelligence agency.

"This agreement, while it still needs to be approved by the Federal Court, brings certainty to one of the most significant issues we have faced," CBA Chief Executive Matt Comyn said in a statement.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made. Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward."

Australia's biggest bank is struggling to rebuild its reputation after a series of scandals revealed flaws in its leadership culture, exposing it to closer regulatory scrutiny, higher compliance costs and potential fines.

Its standing as one of Australia's most venerable companies has been tarnished further by malpractice revealed at an ongoing independent inquiry into the country's financial sector.

The Australian Transaction Reports and Analysis Centre (AUSTRAC), the country's financial intelligence agency, brought civil penalty proceedings against CBA in the Federal Court in August last year for "serious and systemic non-compliance" with anti-money laundering and terror financing rules.

The bank allegedly failed to properly monitor tens of thousands of suspicious transactions and failed to adequately report them to authorities, allowing criminals and terror financiers to launder millions of dollars through CBA accounts.

The breaches, which CBA blamed on a computer error, triggered a selldown in its share price and a board shake-up, with then-CEO Ian Narev announcing his retirement two weeks later amid a public outcry.

In March, CBA had said the Federal Court had referred the civil penalty proceedings initiated by AUSTRAC against the bank for mediation at the request of both the parties.

The bank said it would book a A$700 million provision in its fiscal 2018 results, to be announced in August. It would also pay AUSTRAC's legal fees of A$2.5 million. ($1 = 1.3226 Australian dollars) (Reporting by Rushil Dutta in Bengaluru; Editing by Stephen Coates)</s>Australia's Commonwealth Bank has said it will pay a $700m (£400m; $530m) fine for breaching anti-money laundering and counter-terror financing laws.

The scandal relates to 53,000 suspect transactions that the bank did not immediately report to authorities.

Last year, Australia's financial intelligence agency accused the lender of "serious and systemic" law breaches.

If a court approves the fine, it will be the largest civil penalty in Australian corporate history.

The bank, Australia's largest lender, said it would also cover A$2.5m in legal fees accrued by investigators.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made," chief executive Matt Comyn said on Monday.

Australia's scandal-plagued financial sector is at the centre of a national inquiry into misconduct.

Most of the alleged breaches related to the bank's deposit machines, which could accept up to A$20,000 in cash at a time, anonymously if the person depositing was not a Commonwealth customer.

The bank failed to meet deadlines for reporting transactions over the legal threshold of A$10,000, according to the Australian Transaction Reports and Analysis Centre.

Commonwealth Bank said the breaches were due to a coding error, which meant the machines failed to automatically report the transactions.
• Why is Australia investigating its banks?

The bank has also been investigated over whether it adequately informed shareholders about all potential liabilities.

Former chief executive Ian Narev brought forward his retirement last year as the bank faced pressure over the scandal.

Australia's banking and financial services sector has been rocked by a series of scandals over the last decade.

In December, Prime Minister Malcolm Turnbull established a royal commission inquiry to investigate the scale of wrongdoing.

Among allegations to hit Commonwealth Bank, the inquiry heard that the lender had collected fees from customers it knew had died.

In May, the bank also admitted to losing the bank records of almost 20 million people.</s>The Commonwealth Bank Monday agreed to the largest civil penalty in Australian corporate history to settle claims it breached anti-money laundering and counter-terrorism financing laws.

The Aus$700 million (US$530 million) fine -- which is subject to court approval -- comes after mediation between the nation's biggest bank and the country's financial intelligence agency AUSTRAC.

It follows the lender being taken to court last August for "serious and systemic non-compliance" of anti-money laundering laws more than 53,000 times, with AUSTRAC filing 100 further claims in December.

The bank was also accused of failing to adequately monitor suspected terrorist financiers.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made," CBA chief executive Matt 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. On behalf of Commonwealth Bank, I apologise to the community for letting them down."

The fine appears to be far larger than expected by the bank, which in reporting its half-year cash profit in February said it had put aside Aus$375 million to pay potential penalties from the scandal.

CBA last year admitted to the late submission of 53,506 reports to AUSTRAC for cash transactions of Aus$10,000 or more at ATMs, blaming a "systems-related error".

It also failed to report more than 100 suspicious transactions on time, or at all.

According to AUSTRAC's 583-page statement of claim, some of the allegations included suspected members of a crime syndicate using fake names and IDs to make separate cash deposits to CBA accounts.

AUSTRAC chief Nicole Rose said the outcome was a strong message to the financial industry that non-compliance with anti-money laundering and counter-terrorism financing laws would not be tolerated.

"As we have seen in this case, criminals will exploit poor business practices to launder the proceeds of their crimes," she said.

"This has real impacts on the everyday lives of Australians and puts the community at risk by increasing opportunities for terrorists to support attacks here and overseas, and enabling organised crime groups to peddle drugs to our families and friends.

"I hope this result alerts the financial sector to the consequences of poor compliance, and reinforces that businesses need to take their obligations seriously."

AUSTRAC said it would be the largest civil penalty in Australian corporate history if approved by the Federal Court.

The Commonwealth Bank has endured a rocky time since the AUSTRAC case was lodged, with other regulators launching inquiries over its handling of the alleged breaches and its organisational culture.</s>Australian Bank Slapped With Record Fine For Thousands Of Suspicious Transactions

Australia's largest bank has been hit by a record $531 million fine for delays in reporting tens of thousands of transactions – a breach of the country's anti-money laundering and counterterrorism regulations.

The Commonwealth Bank of Australia, or CBA, admitted that it had been late in reporting 53,000 transactions in excess of AU$10,000 over a three-year period from 2012 to 2015. The settlement, which amounts to AU$700 million, is the largest civil penalty in Australia's corporate history.

The allegations against the bank first surfaced in August. At the time, The Sydney Morning Herald wrote that the government alleged that the suspicious transactions were allowed "to wash through [Commonwealth Bank's] ATMs, including six instances when the bank believed the customers were possibly financing terrorism but did not report them to authorities in the required time."

The newspaper added, "Criminal gangs also laundered more than $70 million through the bank, as part of millions in cash deposits made through the bank's ATMs."

CBA blamed a software error in its deposit-taking ATMs "and argued those violations should be treated as one rather than as a series of individual offenses," according to The Associated Press.

Ultimately, the bank agreed to the fine with the Australian Transaction Reports and Analysis Center, or AUSTRAC. As part of the settlement, Commonwealth Bank also agreed to pay nearly $2 million (AU$2.5 million) in government legal costs.

Prime Minister Malcolm Turnbull described the fine as "huge."

"I just want to say, once again, that we will not tolerate wrongdoing in the financial services sector. Where it has occurred, we will ensure those who are responsible are held to account," Turnbull said.

The CBA scandal precipitated the departure of the bank's former CEO, Ian Narev, shortly after the allegations became public.

The bank's new CEO, Matt Comyn, said of the settlement, "While not deliberate, we fully appreciate the seriousness of the mistakes we made."

"Our agreement today is a clear acknowledgement of our failures and is an important step toward moving the bank forward. On behalf of Commonwealth Bank, I apologize to the community for letting them down," Comyn, who took over as chief executive in April, said in a statement.

The CBA's fine dwarfs the previous record of $34.5 million (AU$45 million) in February 2017 on similar charges against Australia's wagering giant Tabcorp.</s>The Commonwealth Bank of Australia will be forking over a record $700 million, the largest fine in Australian corporate history, to help settle money laundering charges that have beset the financial behemoth after drug dealers used its services to launder tremendous sums of money.

According to AUSTRAC, the Australian government’s financial intelligence agency that helps prevent widespread money laundering, the trouble for CBA began after a drug syndicate exploited an error in the bank’s system to launder well over $600,000 in a single day. According to the Financial Review, AUSTRAC originally launched action against CBA after some 53,700 potentially fraudulent transactions were detected in a short period of time.

The CBA essentially admitted that its services had been exploited and that money laundering violations had indeed been violated, and reached the astonishing $700 million agreement with state authorities in an attempt to bring a swift end to the scandal that’s dominated local financial headlines. According to Reuters, the scandal isn’t necessarily killing the financial institutions’ bottom line; shares of CBA were trading up after news of the record payment surfaced, for instance.

This is likely because some traders and market analysts expected the bank to get hit with potentially billions in fines, given how extreme the breach of money laundering laws had been. The thus relatively-minor $700 million fine, a colossal amount that’s nonetheless comparatively better than what could have been slapped on the company, doesn’t appear to be a doomsday figure some traders had been worried about.

Drug syndicates had essentially been using the CBA’s digital services to make massive anonymous deposits to CBA accounts, which helped them launder money that was almost certainly gained from selling illicit narcotics on the black market.

“As we have seen in this case, criminals will exploit poor business practices to launder the proceeds of their crimes,” AUSTRAC CEO Nicole Rose said in a public statement. “[This money laundering] puts the community at risk by increasing opportunities for terrorists to support attacks here and overseas, and enabling organised crime groups to peddle drugs to our families and friends.”

The stiff fines are likely intended to help deter other financial institutions from allowing such errors like this to occur in the future, too. A recent string of financial scandals has already put AUSTRAC on alert for wrongdoing.

“I hope this result alerts the financial sector to the consequences of poor compliance, and reinforces that businesses need to take their obligations seriously,” AUSTRAC’s CEO concluded.</s>MELBOURNE, Australia — Australia’s largest bank has agreed to pay an almost $530 million fine to settle a civil lawsuit that revealed numerous breaches of the country’s Anti-Money Laundering and Counter-Terrorism Act.

The proposed agreement with the federal government’s financial-intelligence agency, which remains subject to approval by a federal court, includes further admissions by the bank it contravened the law, including breaches of risk procedures, reporting and monitoring.

Commonwealth Bank CBA, +1.62% , Australia’s biggest bank by assets and with a market value of almost $92 billion, said Monday it would pay a penalty of 700 million Australian dollars ($529.8 million) plus the regulator’s legal costs of A$2.5 million to resolve the civil suit.

“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” Chief Executive Officer Matt Comyn said.

An expanded version of this report appears on WSJ.com.

Mattis warns of consequences if Beijing keeps militarizing the South China Sea.</s>The Commonwealth Bank Monday agreed to the largest civil penalty in Australian corporate history to settle claims it breached anti-money laundering and counter-terrorism financing laws.

The Aus$700 million (US$530 million) fine — which is subject to court approval — comes after mediation between the nation’s biggest lender and the country’s financial intelligence agency AUSTRAC.

It follows the bank being taken to court last August for “serious and systemic non-compliance” of anti-money laundering laws more than 53,000 times, with AUSTRAC filing 100 further claims in December.

CBA was also accused of failing to adequately monitor suspected terrorist financiers.

“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” said CBA chief executive Matt Comyn in a statement.

“Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologise to the community for letting them down.” The bank, which in the fallout has replaced senior leadership overseeing financial crimes and pumped millions of dollars into improving its systems, also agreed to pay AUSTRAC’s Aus$2.5 million legal fees. After slumping more than 10 percent over the past month, during which it admitted losing financial records for almost 20 million customers, CBA’s share price rallied 1.44 percent on the settlement to close at Aus$69.69.

The scandal is only the latest issue to damage the reputation of Australian banks, which have been under intense scrutiny amid allegations of dodgy financial advice, life insurance and mortgage fraud, and rigging benchmark interest rates.

Last week, ANZ Bank was accused of “cartel arrangements” over a multi-billion-dollar capital raising, along with its advisers Deutsche Bank and Citigroup. They face potential criminal charges. The scandals led the government early this year to launch a royal commission into misconduct in the finance industry.

The fine for Australia’s largest company appears to be far larger than expected by the bank, which in reporting its half-year cash profit in February said it had put aside Aus$375 million to pay potential penalties.

CBA admitted last year to the late submission of 53,506 reports to AUSTRAC for cash transactions of Aus$10,000 or more at ATMs, blaming a “systems-related error”.

It also failed to report 149 suspicious transactions on time, or at all, and breached its obligations to perform checks on 80 suspicious customers.

According to AUSTRAC’s 583-page statement of claim, some of the allegations included suspected members of a crime syndicate using fake names and IDs to make separate cash deposits to CBA accounts.

“CBA’s disregard of its… obligations allowed criminals to exploit its systems and put the Australian community at risk,” said Home Affairs Minister Peter Dutton.

“This very large number of breaches over several years is unacceptable and should never have been allowed to happen.”

He said some of the suspicious financial transactions not reported were linked to “the international drug trade” and “may have been associated with terrorism financing”.

AUSTRAC chief Nicole Rose said the outcome was a strong message to the financial industry that non-compliance with anti-money laundering and counter-terrorism financing laws would not be tolerated.

“As we have seen in this case, criminals will exploit poor business practices to launder the proceeds of their crimes,” she said.

“This has real impacts on the everyday lives of Australians and puts the community at risk by increasing opportunities for terrorists to support attacks here and overseas, and enabling organised crime groups to peddle drugs to our families and friends.

“I hope this result alerts the financial sector to the consequences of poor compliance, and reinforces that businesses need to take their obligations seriously.”

AUSTRAC said it would be the largest civil penalty in Australian corporate history if approved by the Federal Court.
Australia's Commonwealth Bank agrees to pay a fine of A$700 million for failing to disclose banking transactions above A$10,000.