AUSTRAC action against CBA stretches into 2018

Bank to file its defence against AUSTRAC accusations by 15 December

The Commonwealth Bank of Australia has until 15 December to file its defence against civil action brought against it by AUSTRAC, Australia’s money laundering watchdog.

AUSTRAC last month took action against the bank for what it says is a significant breach of CBA’s anti-money-laundering obligations.

The bank has said that a “coding error” for a failure to report to AUSTRAC suspicious transactions involving its Intelligent Deposit Machines (IDMs), which were rolled out in 2012.

AUSTRAC claims that CBA is guilty of 53,700 breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. CBA has failed to report suspicious matters either on time or at all involving transactions totalling over $77 million, AUSTRAC has alleged.

The two parties this morning appeared before the Federal Court in Sydney for a case management hearing.

Simon White SC, appearing for AUSTRAC, said the parties would struggle to give the court a firm indication of the time required to hear the case until the bank had an opportunity to scrutinise the “large amount of material” AUSTRAC has provided it with.

White said until the bank filed its defence it would not be clear what expert evidence would be required.

John Sheahan QC, appearing for CBA, said the bank was unlikely to challenge a lot what the presiding judge, Justice Yates, described as “primary” facts.

However, Sheahan said that assessing each of the suspicious matter reports (SMRs) that AUSTRAC says the bank failed to file or failed to file within the required timeframe would be “a mini trial and a mini investigation in itself” — with the bank having to assess each of the more than 170 instances to see whether an SMR should have been filed, if not then why not, and whether CBA processes had been followed.

Counsel for CBA had only on 31 August been given AUSTRAC approval to examine CBA’s SMRs, he said.

Sheahan said that there Australia does not have “a long track record of litigation of this kind” beyond AUSTRAC’s action against Tabcorp (which resulted in a $45 million penalty for the gambling company), and that “proceedings of this kind are unusually complex”.

AUSTRAC will have until 16 March 2018 to file any reply to CBA’s defence.

The matter has been listed for a further case management hearing on 2 April.

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