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07 August 2017 - CBA blames AML failures on coding error
Commonwealth Bank of Australia (CBA)
Source - https://www.finextra.com/newsarticle/30931/cba-blames-money-laundering-reporting-failures-on-atm-coding-error?utm_medium=newsflash&utm_source=2017-8-7
Where - Australia
Cost - 624,000,000 AUD
Business line - Corporate Services

Commonwealth Bank of Australia (CBA) has blamed recent money laundering failures on a software coding error.

Australia’s financial intelligence and regulatory agency, AUSTRAC, recently announced it will be launching civil penalty proceedings against CBA for “serious and systemic non-compliance” with anti-money laundering and counter-terrorism financing laws.

The action follows an investigation by AUSTRAC into CBA’s compliance, particularly regarding its use of intelligent deposit machines (IDMs).

According to the regulator, CBA did not comply with the requirements of its AML/CTF programme for three years and failed to give 53,506 threshold transaction reports (TTRs) to AUSTRAC on time for cash transactions of AU$10,000 or more through IDMs from November 2012 to September 2015.

"By failing to have sound AML/CTF systems and controls in place, businesses are at risk of being misused for criminal purposes," said AUSTRAC acting CEO, Peter Clark.

The bank has blamed the TTR issue on a software update to its IDMs. “Following the software update, a coding error occurred which meant the IDMs did not create the TTRs needed,” said CBA in a statement. “This error became apparent in 2015 and within a month of discovering it, we notified AUSTRAC, delivered the missing TTRs and fixed the coding issue. The vast majority of the reporting failures alleged in the [AUSTRAC] statement of claim (approximately 53,000) relate specifically to this coding error. We recognise that there are other serious allegations in the claim unrelated to the TTRs.”

The other serious allegations include failing to report "suspicious matters either on time or at all involving transactions totalling over AU$77 million,” and failure to “mitigate and manage ML/TF risk”, even after the bank became aware of suspected money laundering.

“We need to be ever more vigilant in the area of financial crime and anti-money laundering. The rapid evolution of technology in banking, the increased sophistication of criminal activity, and higher regulatory expectations together create an imperative to continuously raise our standards,” said CBA.