Australia’s financial intelligence agency suing bank for 53,700 breaches of laws, which it accuses of failing to report properly on $77m worth of suspicious transactions

This article is more than 3 years old

This article is more than 3 years old

Commonwealth Bank allegedly failed to act on suspicions that its network of “intelligent” deposit machines was being used by drug syndicates to launder tens of millions of dollars.

The Australian Transaction Reports and Analysis Centre (Austrac), the financial intelligence agency, announced on Thursday it is suing Commonwealth bank for 53,700 breaches of money laundering and counter-terrorism-financing laws.



The case relates to the use of intelligent deposit machines, a type of ATM launched in 2012, which allows customers to anonymously deposit and transfer cash, even when banks are closed.

Commonwealth Bank is accused of failing to report properly on $77m worth of suspicious transactions to Austrac.



Even when it became aware its machines were being used for suspected money laundering, the bank allegedly failed to take steps to “mitigate and manage” the risk, Austrac says.

Austrac alleges the machines were used by four money laundering syndicates, including three linked to drug importation and distribution networks.

The syndicates used the machines to deposit and transfer cash, often at amounts just low enough to avoid arousing suspicion.

One money laundering operation saw more than $21m deposited into 11 CommBank accounts between February 2015 and May 2016, most of which came through the intelligent machines.

The money was allegedly the illicit proceeds of a drug importation operation, and was quickly transferred to domestic accounts.

CommBank knew the accounts to be suspicious as early as May 2015, but failed to take proper steps to alert authorities to a number of large transactions.

By mid-2015, the bank was allegedly aware of unusual patterns of transactions in some of the accounts, but still didn’t alert authorities, and allowed the payments to continue.

It allegedly failed to act even after a warning from the Australian federal police (AFP).

“The AFP advised Commbank in late 2015 that a number of these accounts were connected with an investigation into serious criminal offences, including ‘drug important and unlawful processing of money’,” Austrac alleged in its statement of claim.

“CommBank permitted several of the accounts to remain open even after this time and further transactions occurred. Eight individuals have been charged with dealing in proceeds of crime, with 6 of these individuals already having been convicted.”



Another syndicate involved three people who deposited $2.2m into three CommBank accounts between June 2014 and January 2015. The money was almost immediately transferred to money remitters.



CommBank became aware of the suspicious transactions involving the first of the accounts in July 2014, and the other two soon after.

“However CommBank continued to allow these individuals to transact on these accounts until they were each arrested on 19 January 2015,” Austrac’s statement of claim alleges.

“These three individuals have been charged with dealing in proceeds of crime, in connections with a drug importation syndicate, with one already convicted.”



Another syndicate involved foreign nationals in Australia on holiday visas, who deposited $20.59m into 30 accounts with fake names between late 2014 and August 2015.

The vast majority of that money was transferred offshore, and the deposits were “structured”, or kept at low enough levels that they would not arouse suspicion.

In April 2015, CommBank became aware of “repeated suspicious and connected patterns of structured cash deposits followed by international money transfers”, Austrac alleges.

“Notwithstanding this suspicion, between April and 1 July 2015, Commbank permitted approximately $9.1m to be transferred from these accounts to Hong Kong,” Austrac alleged in its statement of claim.

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Austrac also alleges the bank failed to assess the risk that the machines would be used for money laundering or terror financing before their rollout in 2012.



“CBA took no steps to assess the [money laundering/terror financing] risk until mid-2015 – three years after they were introduced,” Austrac said in a statement.

In total, Austrac has alleged the bank failed to comply with its obligations in monitoring transactions on 778,370 accounts over a period of three years.

The bank allegedly failed to provide a total of 53,506 reports – known as threshold transaction reports – to Austrac on time for cash transactions of $10,000 or more from November 2012 to September 2015.

“These late [threshold transaction reports] represent approximately 95% of the threshold transactions that occurred through the bank’s [intelligence deposit machines] from November 2012 to September 2015 and had a total value of around $624.7m,” Austrac said.

The regulator will take the case to the federal court, seeking a civil penalty.



The Austrac acting chief executive, Peter Clark, said businesses were at risk of being misused for criminal purposes if they failed to have proper money laundering and counter-terrorism financing systems and controls.

“Austrac’s goal is to have a financial sector that is vigilant and capable of responding, including through innovation, to threats of criminal exploitation,” Clark said.

“We believe this can be achieved by working collaboratively with and supporting industry. We will continue to work in this way with our industry partners who also share this aim and demonstrate a strong commitment to it,” he said.

A statement issued by Commonwealth Bank acknowledged the case and said it had cooperated fully with Austrac.

“We have been in discussions with Austrac for an extended period and have cooperated fully with their requests,” the statement said. “Over the same period we have worked to continuously improve our compliance and have kept Austrac abreast of those efforts, which will continue.”

The bank said it took its regulatory obligations “extremely seriously”. It said it was one of the largest reporters to Austrac.

“On an annual basis we report over four million transactions to Austrac in an effort to identify and combat any suspicious activity as quickly and efficiently as we can,” the statement said.

“We have invested more than $230m in our anti-money laundering compliance and reporting processes and systems, and all of our people are required to complete mandatory training on the Anti-Money Laundering and Counter-Terrorism Financing Act.

“We are reviewing the nature of the proceedings and will have more to say on the specific claims in due course.”

Intelligent deposit machines have become responsible for vast deposits of money since their launch in 2012. More than $1bn was deposited in both May and June last year alone.