Insights & Analyses

Australian bank sued after 54K breaches of anti-money laundering & terrorism laws

August 9, 2017

Commonwealth Bank of Australia has blamed a coding error after nearly 54,000 large transactions went unreported, in violation of the country’s anti-money laundering and terrorist financing laws, setting the stage for what could be a massive penalty on the financial institution.

The Australian Transaction Reports and Analysis Centre alleges that Commonwealth Bank allowed suspicious transactions to occur for years without being reported. Austrac says that more than 53,700 violations have occurred since 2012.

The lawsuit has the potential to be the largest civil penalty in Australian corporate history, according to The Guardian, eclipsing the $45 million Australian paid by gambling company Tabcorp for AML violations earlier this year.

In fact, while unlikely, if Commonwealth were to be hit with the maximum penalty for every alleged breach, the total fine would reach A$966.6 billion.

For their part, Commonwealth Bank officials say the transactions went unreported because of an apparent coding error. The company also axed bonuses for its senior executives in the midst of the ongoing scandal.

Austrac’s complaint claims that five people involved in the alleged violations were deemed to be possibly connected to terrorist activity.

The Australian lawsuit closely follows a $4.6 million fine levied against U.S. bank JPMorgan Chase earlier this month, for failure to provide accurate information for checking account screening reports. The oversight could have allowed fraudulent people to slip through the system and be allowed to open a bank account — or prevented a legitimate customer in good standing from opening one.