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Monday, July 2, 2018 - Commonwealth Bank hit with new class action over money-laundering breaches
Commonwealth Bank of Australia (CBA)
Source - https://lawyerly.com.au/commonwealth-bank-hit-new-class-action-money-laundering-breaches/
Where - Australia
Business line - Corporate Services

The Commonwealth Bank of Australia is facing a second shareholder class action after agreeing to fork over $700 million to settle anti-money laundering claims by the government’s financial intelligence agency.

Boutique law firm Phi Finney McDonald filed the action in the Federal Court on Friday on behalf of four giant US pension funds, including the California State Teachers’ Retirement System, a fund worth $US224 billion.

PFM director Tim Finney said the case, filed three weeks after CBA agreed to pay the record sum to settle AUSTRAC’s action, was being financed by litigation funder Therium.

It’s a closed class action, he said, open only to a small but wealthy group of investors that sought an alternative funding arrangement from that of the first class action, filed by Maurice Blackburn Lawyers in October.

“We’re acting on behalf of a very informed and sophisticated group,” Finney said.

He said Therium’s commission rate was lower than the rate sought by IMF Bentham, the funder underwriting Maurice Blackburn’s case, but he would not disclose the percentage.

“We wanted to ensure the process didn’t set off the intense litigation-by-media-release that has occurred in relation to the AMP class actions,” Finney said, referring to the five competing cases against the wealth manager.

PFM case is filed on behalf of shareholders who bought CBA shares between June 16, 2014 and August 3, 2017.

“CBA intends to vigorously defend this new claim,” the bank said in a statement Monday.

As part of its settlement, announced in early June, CBA will pay $700 million plus $2.5 million in legal fees.

“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. On behalf of Commonwealth Bank, I apologise to the community for letting them down,” CBA chief executive officer Matt Comyn said in a statement at the time.

AUSTRAC brought the case in August, accusing Australia’s largest bank of violating the anti-money laundering law on more than 50,000 occasions.

As part of the settlement, CBA admitted to late filing of 53,506 threshold transaction reports for cash deposits through intelligent deposit machines, inadequate adherence to risk assessment requirements for intelligent deposit machines on 14 occasions, and to late filing 149 suspicious matter reports.

It also admitted that between between October 2012 and October 2015, its transaction monitoring did not operate as intended on many accounts and that it breached its due diligence obligations to 80 customers.

Maurice Blackburn’s class action alleges that between July 1, 2015 and August 3, 2017, CBA failed to disclose to the market material information in relation to its anti-money laundering and counter terrorism financing controls, including that it was potentially exposed to an enforcement action by AUSTRAC.

The firm said on Monday its case was the clear choice CBA shareholders.

“As Australia’s leading class action law firm, Maurice Blackburn has a proven track record in securing the nation’s largest shareholder recoveries, backed by a trusted funder in IMF Bentham,” a spokesperson said.