CBA responds to AUSTRAC allegations

The Commonwealth Bank of Australia (CBA) has slashed the bonuses of its CEO and executive leadership in response to the recent legal action from the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The financial intelligence and regulatory agency has accused CBA of more than 53,000 contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) in relation to its intelligent deposit ATMs.

According to a statement from CBA chairman, Catherine Livingstone, the CBA board has met, giving consideration to risk and reputation matters impacting the Group, and decided to reduce to zero the Short-Term Variable Remuneration outcomes for the CEO and Group Executives for the financial year ended 30 June 2017.

“In reaching this conclusion the overriding consideration of the Board was the collective accountability of senior management for the overall reputation of the Group.”

In recognition of this shared accountability, the board also decided to reduce Non-Executive Director fees by 20% in the current 2018 financial year.

Regarding the AUSTRAC allegations, a separate CBA statement clarifies the role of the bank’s Intelligent Deposit Machines (IDMs) in providing Threshold Transaction Reports (TTRs) to AUSTRAC:

• May 2012 – IDMs providing correct TTR reporting
• Late 2012 – An unrelated software update led to IDMs not creating the necessary TTRs
• 2015 – Error becomes apparent, and CBA notifies AUSTRAC within a month of its discovery
• September 2015 – With the coding issue fixed, IDMs provide correct TTRs to AUSTRAC, up to the present

According to a CBA update to the Australian Stock Exchange (ASX), the bank is currently preparing its defence to the 580-page AUSTRAC statement of claim, which may include clarifications around the extent to which any contraventions arise from a single course of conduct:

“For example, AUSTRAC alleges that approximately 53,000 threshold transaction reports were lodged late. Late lodgement carries a penalty of up to $18 million. However, these alleged contraventions could be considered to arise from a single course of conduct to the extent that they emanated from the same systems error.”

In recognition of the other serious AUSTRAC allegations unrelated to the TTRs, CBA reaffirmed its commitment to an ongoing cooperative relationship with AUSTRAC, and to taking proactive steps to further enhance its compliance program and operations.

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