Commonwealth Bank of Australia (CBA) has today lodged with the Federal Court of Australia its response to the amended statement of claim filed by AUSTRAC on 14 December 2017 and its defence to the shareholder class action commenced by Zonia Holdings Pty Ltd on 9 October 2017.
In our amended defence in the AUSTRAC matter, we deny the majority of the 100 additional allegations.
In our defence of the class action matter, we categorically deny all allegations of liability.
We consider that we have complied with our continuous disclosure obligations at all times. There was no price sensitive information about the matters raised in the AUSTRAC proceeding that required disclosure.
AUSTRAC proceeding
We understand that we play a key role in law enforcement and we take our anti-money laundering and counter-terrorism financing (AML / CTF) obligations extremely seriously.
During the period covered by AUSTRAC’s claim and to the end of 2017, we submitted more than 19 million reports to AUSTRAC, including over 4 million last year alone. During the same period we submitted more than 40,000 suspicious matter reports (SMRs). We also fulfilled more than 20,000 requests for assistance from law enforcement agencies last year.
We have invested more than $400 million in financial compliance systems to counter financial crime over the past eight years and employ hundreds of personnel dedicated to detecting and disrupting financial crime.
Of the 100 additional allegations in AUSTRAC’s amended statement of claim, CBA denies 89 allegations in full and admits 11 allegations in part.
Taking into account the allegations in the original claim as well as the amended claim, our response to AUSTRAC’s claim is summarised below.
Late Threshold Transaction Reports (TTR)
We agree that we were late in filing 53,506 TTRs but we will submit that, for the purposes of penalty, these should be treated as a single course of conduct.
AML / CTF Program
We agree that we did not adequately adhere to risk assessment requirements for Intelligent Deposit Machines (IDMs) – but do not accept that this amounted to 14 separate contraventions.
We agree that our transaction monitoring did not operate as intended in respect of a number of accounts between October 2012 and October 2015.
Suspicious matter reports
AUSTRAC alleges 230 contraventions concerning suspicious matter reporting (SMR) obligations. We admit we made errors in 98 instances in connection with our SMR obligations, although we say that there were less than 98 separate contraventions. We admit that:
- 53 SMRs were filed late;
- a further 45 SMRs should have been filed (above and beyond the 264 SMRs we actually filed in relation to the syndicates and individuals identified in the claim).
We deny 132 of the allegations concerning SMRs.
Ongoing customer due diligence requirements
We admit 56 (in whole or in part) but deny a further 53 allegations concerning ongoing customer due diligence requirements.
Further detail can be found in CBA’s Amended Concise Statement in Response.
Class action
In its defence to the class action, CBA categorically denies all allegations of liability made against it.
The class action alleges matters including that, between 1 July 2015 and 3 August 2017, CBA failed to disclose to the market material information in relation to aspects of its AML/CTF controls that are the subject of the AUSTRAC proceeding. The allegations include that CBA failed to disclose that it was potentially exposed to an enforcement action by AUSTRAC.
CBA rejects the assertion that it had any price sensitive information in respect of its AML/CTF controls environment or the risk of the AUSTRAC proceeding, and maintains that it at all times complied with its continuous disclosure obligations.
CBA has historically had a good relationship with AUSTRAC, with which it collaborates extensively including through the Fintel Alliance and the AUSTRAC private/public sector partnership. AUSTRAC has acknowledged CBA’s contribution in this field, including by inviting the executive in charge of CBA’s financial crime prevention team as the Australian financial services delegate to participate at the Joint Experts Meeting of the inter-governmental Financial Action Task Force in Moscow in April 2017.
CBA first became aware of AUSTRAC’s proceeding on the day it filed its statement of claim with the Federal Court on 3 August 2017.
CBA says that at no time prior to 3 August 2017 did AUSTRAC tell us:
- that it had decided to take any action against CBA; or
- about the number or nature of the contraventions it would be alleging against CBA.
CBA takes its continuous disclosure obligations seriously and will continue to vigorously defend the claim.
