CBA to pay $700m for anti-money laundering breaches

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By Leith van Onselen

CBA has agreed to a $700 million settlement with Australia’s anti-money laundering regulator, Austrac, after the discovery last year of 53,000 cash deposit breaches. From The Australian:

CBA will pay a $700m civil penalty plus the regulator Austrac’s costs of $2.5m, as it admits to breaching anti-money laundering and counter-terrorism financing legislation, including failing to properly carry out risk procedures and customer monitoring. Some of Austrac’s allegations were dismissed as part of the mediated deal.

If agreed to by the Federal Court, this will represent the largest ever civil penalty in Australian corporate history…

CBA’s intelligent deposit machines, which were rolled out in 2012, failed to automatically send the regulator information about potential washing of money through its smart ATMs by criminal syndicates and terrorist financiers…

CBA chief executive Matt Comyn said the agreement still needed to be approved by the Federal Court.

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

“In reaching this position, we have also agreed with Austrac that we will work closely together based on an open and constructive approach.”

While this is all well and good, there remains one money laundering honey pot that continues to be ignored by policy makers and the media, which should garner far more outrage from the public: Australian property.

Legislation to implement the second tranche of anti-money laundering (AML) legislation covering real estate gate keepers has been gathering dust in Canberra for a decade, despite a conga-line of international organisations demanding Australia take action.

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Accordingly, realtors, lawyers, accountants and other real estate gate keepers are currently exempted from AML requirements. And this exemption has provided an easy avenue for foreign buyers to launder funds through Australian property.

Why won’t Australia’s policy makers address the dirty money being washed through Australia’s homes? This is where the biggest problem lies.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.