The Commonwealth Bank is facing a potential class action from shareholders over the big share price drop when AUSTRAC launched a money laundering court case against it.

Key points: Law firm Maurice Blackburn and funder IMF Bentham seeking CBA shareholders to participate in potential class action

Law firm Maurice Blackburn and funder IMF Bentham seeking CBA shareholders to participate in potential class action Maurice Blackburn says CBA's share price fell $4.58 from highs before the AUSTRAC claim to lows afterwards

Maurice Blackburn says CBA's share price fell $4.58 from highs before the AUSTRAC claim to lows afterwards The law firm says the claim will be "very large", with about 800,000 shareholders potentially affected

Law firm Maurice Blackburn is running the case with financial backing from litigation funder IMF Bentham.

The action, should it proceed, is seeking compensation for shareholders for the drop in CBA's share price when AUSTRAC filed its court case against the bank.

That was around two years after senior management and the board of directors first became aware of allegations the bank had breached anti-money laundering and terrorism financing laws.

Maurice Blackburn is therefore alleging that CBA breached its continuous disclosure obligations — a part of corporations law that requires listed companies to promptly inform investors of any news that may have a significant effect on the share price.

The corporate watchdog, ASIC, has previously confirmed that it is investigating whether CBA met its disclosure requirements surrounding the AUSTRAC investigation.

Maurice Blackburn said the Commonwealth Bank has around 800,000 shareholders who suffered a significant share price drop when AUSTRAC launched its Federal Court proceedings on Thursday August 3.

In its Federal Court proceedings, AUSTRAC — the Federal Government's anti-money laundering watchdog — is alleging that CBA failed to notify it of more than 53,000 transactions above $10,000 that it was required to report.

Each breach, if proven, is subject to a maximum penalty of $18 million.

That means the bank is theoretically up for hundreds of billions of dollars in fines, although a settlement in the hundreds of millions is far more likely given domestic and international precedents.

These deposits were made through the bank's "Intelligent Deposit Machines" (IDMs), introduced in 2012, and CBA said the failure to report was due to one software coding error.

However, the reporting failures continued for several years and AUSTRAC's court documents allege CBA's cooperation with it was deficient, including several other alleged money laundering and terrorism financing breaches unrelated to the IDMs.

'Very large claim' as shareholder losses neared $8b

While Commonwealth Bank shares did not move much that day, they fell 3.9 per cent the day after, when traders had a chance to digest the seriousness of the breaches and the prospect of multi-billion-dollar penalties.

The $3.25-a-share decline on that Friday alone wiped around $5.6 billion off CBA's market value, giving a sense of the potential scale of the lawsuit's claim.

However, it seems that Maurice Blackburn will attempt to base its claim on a $4.58 share price drop between CBA's intraday high of $84.69 to a low of $80.11 on Monday August 7.

That would put the scale of shareholder losses at $7.8 billion.

"Our investigations and analysis show that this drop was in the top 1 per cent of price movements that CBA experienced in the past five years, making it apparent that the news was of material significance to shareholders," said Andrew Watson, Maurice Blackburn's head of class actions, in a statement.

Mr Watson told reporters that the claim is likely to be the biggest ever run by Maurice Blackburn, exceeding six other $100 million-plus claims.

"It's going to be large," he replied to media questions about the potential quantum.

"On any view, it's going to be a very large claim."

Mr Watson was also scathing of the Commonwealth Bank's board for "sitting on" their knowledge of the investigation for around two years before telling shareholders.

"It appears that the CBA completely failed to honour its obligations of transparency and openness to its shareholders," he said.

"Shareholders had a right to expect better from the board of a penny dreadful stock.

"That they were treated with such blatant and cavalier disregard by Australia's largest listed entity is simply gobsmacking."

Australia the best market for shareholder actions outside US

The proposed action against CBA is the latest in a wave of shareholder class actions, which have proliferated since the global financial crisis opened the floodgates.

Not only has the volume of lawsuits increased, but Professor Ian Ramsay — the director of Melbourne University's Centre for Corporate Law — said there are now more companies willing to stump up the cash to fund them.

"We've never seen more litigation funders operate in the Australian market," he told ABC News.

Professor Ramsay said that is largely because Australian laws are very favourable to potential shareholder class action litigants.

"Many people would say that Australia is now the most liberal market for shareholder class actions outside the United States," he added.

The Commonwealth Bank issued a short statement later in the day, merely acknowledging the public announcement of the lawsuit.

"Commonwealth Bank has not been served with any legal proceedings," it noted.

"We will keep the market informed of developments."

Professor Ramsay said there is no guarantee the lawsuit will even go ahead, as it depends on enough shareholders signing up.

""It's too early to know whether the class action will proceed, because it's just an announcement of an investigation," he said.

"It's certainly too soon to know whether, if the class action does proceed, it actually will succeed."

If the case does get filed with a court, there is still a good chance it will not actually be heard by one.

"It's very rare for a shareholder class action to actually go to trial, let alone a court judgment, the majority are settled," Professor Ramsay added.

News of the looming lawsuit dented CBA shares, which had traded higher early in the session, but were down 0.6 per cent at $78.16 by 1:13pm (AEST) and lagging the other three major banks.