by Chris Becker
News came in just after the close of the markets yesterday that looks set to pull the rug out of its share price on the open this morning. Austrac, the government’s financial intelligence body tasked with enforcing the the Anti-Money Laundering and Counter-Terrorism Financing Act has alleged that “Commonwealth Bank failed to inform regulators about suspicious cash deposits in its ATM network, in which money laundering syndicates deposited tens of millions of dollars through the bank”
Eep!
More here from the The Age:
The action alleges more than 53,700 contraventions of the act, mainly through intelligent deposit machines, a type of ATM that allows anonymous cash deposits.
Austrac alleges millions of dollars were put into the machines by money laundering syndicates, with some of the cash sent offshore, and some of the accounts connected with drug smuggling.
It says CBA failed to report more than 50,000 transactions of more than $10,000 to authorities on time, and did not carry out an anti-money-laundering risk assessment before rolling out the ATMs in 2012.
CBA acknowledged that the civil proceedings had been brought and said it would have more to say on the specific claims “in due course”.
Some more details have been revealed at ABC this morning:
In mid-2015, 11 Commonwealth Bank accounts were opened in 11 different names. Eleven different New South Wales drivers’ licences were used to open the accounts.
If anyone at the Commonwealth Bank had checked, they would have noticed the pictures on most of the licences featured the same overweight man.
That man was Kha Weng Foong. He was sentenced late last year as part of a money-laundering syndicate that funnelled about $4.5 million through the Commonwealth Bank to Hong Kong in five weeks in mid-2015.
What the men didn’t know was the Australian Federal Police were watching. On the morning of August 24, 2015, after a month of surveillance, Foong and Fung were arrested.
Police found $40,000 on Foong and almost $200,000 in his car. They found 16 fake NSW drivers’ licence cards and a wealth of banking material. At Fung’s home they found a black bag with $520,000 inside. When questioned, Fung told federal police a man named “Johnny” had given it to him two days before and asked him to hold onto it.
Both Foong and Fung have been sentenced for the money laundering.
The three men funnelled $4.5 million out of Australia, partly because of lax standards at the Commonwealth Bank.
And if Austrac’s allegations are to be believed, it was only the tip of the iceberg.
Shareholders and not management are likely to pay for this gross incompetence by CBA, although there maybe some political capital here for government and authorities to use against the biggest division of Megabank.
It also puts paid to question if such lax standards are in place at the other big banks, and also the current share market rally which relies upon the 50% plus weighting of the big banks for momentum.
CBA’s share price has bounced back since the start of the year after retracing to $70 per share:
