The Turnbull Government has welcomed the agreement between the Commonwealth Bank of Australia (CBA) and AUSTRAC – the Government's financial intelligence and regulatory agency – for a record $700 million non-tax deductible penalty to resolve court action over breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
The proposed settlement will be put to the Federal Court for determination.
The court action relates to 53,750 breaches, including where CBA failed to report to AUSTRAC suspicious financial transactions conducted by people connected to the international drug trade and transactions CBA considered may have been associated with terrorism financing.
The Minister for Home Affairs Peter Dutton said CBA has acknowledged its clear breaches of the law and accepted responsibility for its actions through this negotiated settlement.
"CBA's disregard of its AML/CTF obligations allowed criminals to exploit its systems and put the Australian community at risk. This very large number of breaches over several years is unacceptable and should never have been allowed to happen," Mr Dutton said.
Treasurer the Hon. Scott Morrison MP said that the Australian community expects the financial sector to better protect itself from exploitation by criminals and individuals associated with terrorist groups.
"Complying with the law is non-negotiable, especially when it comes to our largest financial institutions that Australians rely on for their homes and businesses and the Government is serious about enforcing any breaches. Banks should be leaders in ensuring their systems cannot be compromised by criminals seeking to launder money or finance terrorist activities," Mr Morrison said.
"This result will remind boards and managers of financial institutions across Australia that the Government is serious about maintaining a strong financial system where crime can't flourish."
The Attorney-General Christian Porter commended AUSTRAC on its prosecution of the grave allegations against CBA that has led to this significant proposed settlement amount for the Commonwealth.
"As the Minister responsible for considering and approving these settlement parameters, I congratulate AUSTRAC, its CEO and legal team for their engagement with me which has enabled this matter to be resolved in such a successful and speedy way," Mr Porter said.
The Ministers praised AUSTRAC for its decisive action to enforce the law and for its ongoing program to educate the financial sector about its AML/CTF obligations.
The Government has acknowledged the important role AUSTRAC plays in protecting the Australian community by providing an additional $43.3 million over the next four years to boost its capability to enforce compliance with the AML/CTF Act.