Wednesday, February 8, 2023

Australia’s Largest Bank Faces Money Laundering, Terrorism Fines

Australia’s Largest Bank Faces Money Laundering, Terrorism Fines

The largest bank in the Southern Hemisphere, the Commonwealth Bank of Australia (CBA) faces huge financial penalties after “serious and systemic non-compliance” with anti-money-laundering and terrorism financing laws. Reports say the civil charges stem from CBA’s use of ATMs that can process up to $20,000 AUD ($15,900 USD) per transaction.

Also read: Coinbase Changes Mind, Will Support Bitcoin Cash – Next Year

It’s the first time a major bank has faced such charges. CBA, which was government-owned until the mid-1990s, is one of Australia’s “big four” banks and is the country’s largest publicly-traded company.

Bank Allegedly Accepted Thousands of Anonymous Deposits

In its defense, CBA said it was reviewing the allegations and would never deliberately undertake action that enabled crime.

AUSTRAC logoThe federal government’s financial crimes investigator AUSTRAC said the bank had not adequately reported 53,700 transactions of over $10,000 AUD through the machines. Of the transactions, which totaled $625 million, $77 million involved “suspicious matters”.

At the center of the issue are automatic banking machines known as “intelligent deposit machines”, or IDMs. The machines accept cash and check deposits with no ID requirement from depositors.

CBA rolled out a network of IDMs in 2012 but since then had failed to comply even with its own AML/CTF rules, AUSTRAC said.

According to Reuters, AUSTRAC’s court filing said “the effect of CommBank’s conduct in this matter has exposed the Australian community to serious and ongoing financial crime”.

Many IDM deposits were found to have fake names and eventually found their way to drug importation syndicates, AUSTRAC said. It added the Commonwealth Bank did not comply with regulations even after it was notified of these issues.

Banks Face Strict Money Laundering Laws

Bitcoin and cryptocurrencies often face media and government accusations that the technology facilitates crime. Proponents counter that established financial institutions are no better — or are in fact far worse.

However strict anti-money laundering and counter terrorism financing (AML/CTF) laws in most countries also make large banks reluctant to deal with cryptocurrency companies. Fears of large penalties and bad press like those CBA faces, along with the relatively small size of the cryptocurrency economy, mean large banks often shut the door completely.

The Australian government’s action against its largest bank means these attitudes are unlikely to change any time soon.

What’s more at fault, banks, or government regulations? Let’s hear your thoughts.

Images via Commonwealth Bank, AUSTRAC, Wikimedia Commons

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