SYDNEY (Reuters) - Commonwealth Bank of Australia (CBA) (CBA.AX) agreed to pay a record penalty of A$700 million ($529.3 million) to settle explosive money laundering charges brought by Australia’s financial intelligence agency.
The biggest financial penalty in Australian corporate history was almost double the amount CBA had set aside, signaling the tougher regulatory framework Australian banks face following revelations of widespread misconduct.
Even so, CBA shares were up 1.5 percent in afternoon trade as investors breathed a sigh of relief that authorities had not pursued much larger fines, in a case that shocked the country and triggered an executive shake-up at the bank.
It is the second major case new CEO Matt Comyn, who replaced Ian Narev in the wake of the scandal, has settled with regulators in a month after admitting to rate-manipulation allegations.
Australia’s biggest bank admitted it had breached money laundering and terror financing laws on 53,750 occasions, according to an statement of facts tendered in court by both parties.
Suspicious transactions were repeatedly not reported, and monitoring processes failed, it said.
“The money laundered through the CBA accounts included the proceeds of drug and firearms importation and distribution syndicates – predominantly involving methamphetamine,” the court document said.
CBA also failed to adequately notify the regulator of transactions linked to several customers who posed “a potential risk of terrorism or terrorism financing”.
CBA shares were up 2 percent in a slightly positive market, even though the fine was by far the biggest in Australian corporate history and almost double the A$375 million CBA had set aside to deal with the case.
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