The Commonwealth Bank’s money-laundering scandal has deep, deep roots in Australia’s business community.
It was only a few days ago that we were being lectured, yet again, by the Business Council of Australia about company tax cuts, IR reform, the usual stuff — while its leaders audibly puzzled over why the community was becoming ever more hostile to big business. Commonwealth Bank CEO Ian Narev — who last week was demanding company tax cuts — is a BCA board member. Former BCA chair Catherine Livingstone has been the chair of CBA since January. Will the BCA emerge today to condemn, or even express concern, about the behaviour of one of its senior members?
The BCA describes itself as “a forum for the chief executives of Australia’s biggest companies to promote economic growth and social progress in the national interest”. As alleged by the Australian Transactions and Reports Analysis Centre (AUSTRAC) — and so far uncontested by CBA — the bank’s failure was about as far from the national interest as it’s possible to get.
Most damaging is AUSTRAC’s claim that CBA did nothing to shut down accounts, or any other action, even after being told by the Australian Federal Police that they were being used for money-laundering. And even after its own internal systems identified that accounts were being misused.
What now? Clearly the bank will want to prevent the case going to court so that the full allegations are laid out in public, and do a deal settled with the regulator — negotiations are doubtless underway about the size of the fine. Given the extraordinary number of breaches of reporting requirements — over 50,000 — the total fines facing the bank run to hundreds of times annual profits. As the Financial Review’s Chanticleer noted today, “it is hard to see a court imposing that level of penalty as it would only serve to destroy the institution. A fine of several hundred million would be manageable for a bank earning $9 billion a year.”
What will also be under negotiation are the additional requirements that the bank will agree to, such as forcing it to overhaul its internal systems and lowering the reporting thresholds for the bank.
But what will the CBA board do? A number of directors (besides Narev) were on the board when these contraventions allegedly happened. Harrison Young, who has been a director since 2007, Andrew Mohl, who has been a director since 2008, Brian Long, a director since 2010, Launa Inman, a director since 2011. Where does responsibility for what appear to be egregious and highly dangerous breaches stop? Surely a clean out of the board and some of the bank’s most senior management is needed to make an example, and to ram home the point to the wider business community that the national interest is more than just tax cuts, deregulation and going after workers.
The claims from AUSTRAC are the second against a major Australian company. In February, Tabcorp was fined $45 million for 108 contraventions of the anti-money-laundering and counter-terrorism laws. But Austrac appears to have been painfully slow in responding to what looks very much like systemic non-compliance by the CBA. And what’s happening at other banks? What’s stopping terrorism-financing via our financial institutions?
Mostly assuredly, this isn’t just about the CBA. The banking industry worldwide has a huge problem with money-laundering. In 2014 alone, banks in the US and Europe paid about US$65 billion in anti-money-laundering related fines. For example, the huge HSBC was fined US$1.9 billion in 2012 over money-laundering and is currently under a new investigation over its controls. BNP Paribas was fined US$8.9 billion in 2014 — a year when total fines levied on banks and other financial groups by regulators in the US and Europe (but not in Australia) totalled US$65 billion.
Plainly, senior people at CBA weren’t paying the slightest attention to what was happening to their overseas counterparts. Another example of just how staggering these failings are.
I bet there won’t be much of a fine levied. As opposed to some poor bastard who has over-claimed on centrelink and who is then fined into poverty. The frustration one feels about one’s utter powerlessness against the big end of town.
Sack the board, all of ’em. Fine the company to extinction. (Side benefit might be wiping out the budget deficit…)
To anyone who thinks this is too much please explain what actions short of this will make banks obey the law.
Then start a new new bank with public ownership. You could even call it the Commonwealth Bank. Then investigate all the other banks….
Agree 100%.
Commbank has had a string of scandals in recent times & one wonders how immoral, illegal & dastardly their behaviour needs to be before management is forced to give frank answers & is adequately punished.
Make the fine sufficiently large that the only way it is settled is that the bank becomes nationalised.
It could be The People’s Bank – wouldn’t that be novel?
53 instances, with penalties up to $18 million per instance – quite likely that could be the case.
The funny thing is that the maximum possible fines would only equal the last 10 last years’ profit – 53,000 x $18M = $954,000,000,000.
But it would be a start – never mind too big to fail, it’s too much of a failure to remain big.
If they’d prefer, like Milton’s Moloch, “if not to be Supreme, would rather not be.” that would be an added benefit.
My mistake, 53,000 breaches of course.
…. maybe I could get a job at “Narev’s Money Factory and Laundry’ overseeing pocket-cleaning and financial advice …. but then I’d admit my mistake?
Narev will probably put it down to a just a few rogue ATM’s and then do his best Chief Wiggum impersonation “Move along. Nothing to see here folks”. Hey it worked for the financial advisors scandal.
Can Malcolm ( an ex-banker admittedly) continue to deny a Royal Commission into these parasitic criminals? Only if he’s complicit.
It’s TIME! . . . It’s OVER TIME! Royal Commission NOW! With just a little bit of luck it could happen BEFORE the next election; BEFORE the H.R.C. commences legal action to free Manus inmates (oops allegedly they are free . . . to roam anywhere within NG’s territorial perimeter fence); BEFORE Abbott re-ascends; AFTER the Marriage Act has been rewritten; AFTER LNP accept Climate Change . . . and BEFORE Murray Darling food bowl becomes part of the Great Sandy Desert.
What a circus?
How high above the law – that binds we plebs to the ground – do these clowns think they fly?
And it will be interesting to see how Master of Rings Turnbull, deflects reflection on that royal commission camel over this straw.