Commonwealth Bank of Australia (CBA) said on Monday it would pay a penalty of A$700 million ($529.27 million) to settle money laundering charges brought by Australia’s financial intelligence agency.
“This agreement, while it still needs to be approved by the Federal Court, brings certainty to one of the most significant issues we have faced,” CBA Chief Executive Matt Comyn said in a statement.
While not deliberate, we fully appreciate the seriousness of the mistakes we made. Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward.”
Australia’s biggest bank is struggling to rebuild its reputation after a series of scandals revealed flaws in its leadership culture, exposing it to closer regulatory scrutiny, higher compliance costs and potential fines.
Its standing as one of Australia’s most venerable companies has been tarnished further by malpractice revealed at an ongoing independent inquiry into the country’s financial sector.
The Australian Transaction Reports and Analysis Centre (AUSTRAC), the country’s financial intelligence agency, brought civil penalty proceedings against CBA in the Federal Court in August last year for “serious and systemic non-compliance” with anti-money laundering and terror financing rules.
The bank allegedly failed to properly monitor tens of thousands of suspicious transactions and failed to adequately report them to authorities, allowing criminals and terror financiers to launder millions of dollars through CBA accounts.
The breaches, which CBA blamed on a computer error, triggered a selldown in its share price and a board shake-up, with then-CEO Ian Narev announcing his retirement two weeks later amid a public outcry.
In March, CBA had said the Federal Court had referred the civil penalty proceedings initiated by AUSTRAC against the bank for mediation at the request of both the parties.
The bank said it would book a A$700 million provision in its fiscal 2018 results, to be announced in August. It would also pay AUSTRAC’s legal fees of A$2.5 million.