By Jim Hayes
After facing accusations form the Federal Government’s financial intelligence agency AUSTRAC, involving serious breaches of anti-money laundering and counter-terrorism financing laws, the Commonwealth Bank has agreed to pay a $700 million fine. It will also pay AUSTRAC’s $2.5 million legal costs.
The bank has also admitted to the late filing of 53,506 reports of transactions above $10,000 through its “intelligent deposit machines” (IDMs), 149 suspicious matter reports were filed late, or not filed at all, failure to perform proper checks on 80 suspicious customers and transactions, and 14 occasions where the bank failed to adequately assess risks related to its IDMs.
A fine is justified, but it is not nearly enough, given the scale of the misdeeds. The Commonwealth has been caught out deliberately engaged in organised criminal activity. Doing it on this scale is no accident. Criminal charges are appropriate and none have been laid.
If it had of been anyone else, they would be personally brought before the court and face the prospect of jail time. The Commonwealth Bank and those making the decisions got punishment light.
A deal has been cut instead of imposing criminal charges. The reason is that the government’s persistence on continuing to allow the industry to self-regulate, rather than the alternative of compulsion.
This is especially important, given the revelations from the Royal Commission and other places, which show the banks have been behaving as a cartel for dishonest behaviour, and ripping off the customer at every opportunity.
One would think that in these circumstances, a strong message would be called for
The deal struck with the Commonwealth Bank hardly suggests that wrongdoers will be punished on a scale that matches the extent of their wrongdoing.
That it is precisely the banks’ inability to regulate themselves according to community standards that has been a big part of the problem, is conveniently forgotten.
Consequently, rather than prosecution, there have been negotiations, to see how to get over a public scandal, while masking it look like something has been done. No wonder the Commonwealth Bank is happy to go down this road.
Taking the self-regulation option, allows the banks to escape serious consequences, by calling deliberate breaches a mistake that warrants a lesser punishment.
The message that this sends out is that the banks can continue what they are doing, and if they do it so clumsily that they get caught out in the end, the punishment will still not be enough to force them to change their ways.
Only when enough external regulation is imposed on the banks, will there be a chance for misbehaviour to be checked. The Australian government does not want to do this, and opts to continue, as far as it can, to protect the banks and those running them.