Reserve turns up the heat on CBA
THE Reserve Bank and the corporate regulator have lined up to whack the nation’s biggest bank over its alleged breach of money-laundering and terrorism-financing laws.
RBA governor Philip Lowe yesterday told a parliamentary economics committee he viewed the allegations against the Commonwealth Bank as “very serious” and reiterated laws “need to be respected”.
The Government’s antimoney laundering authority, Austrac, last week launched civil action in the Federal Court, accusing the CBA of “serious and systemic” legal breaches involving more than 50,000 transactions.
Dr Lowe lashed the lender, saying accountability was crucial. “Banks should not be doing money laundering and they should know who is operating the accounts that they open. They are very important laws and they need to be respected,” Dr Lowe said.
“If shortcomings are identified then there needs to be accountability and that . . . needs to be both through the courts and internally within the organisation. It is very serious, we have these laws for a reason and they need to be enforced and people need to be held to account.”
CBA chairwoman Catherine Livingstone has docked 12 executives about $16 million in short-term bonuses.
Bank chief executive Ian Narev has acknowledged he and his executive team could lose millions of dollars more in bonuses as the fallout grows.
Dr Lowe yesterday said trust in the banking sector had been eroded.
“On trust, it’s fair to say that trust in banking has been strained,” he said. “On service, it’s fair to say service has taken a back seat to sales and the banks know that and they’re addressing it.”
At the same time, the head of the corporate regulator told a parliamentary committee he was exploring whether the bank had complied with the Corporations Act and its continuous disclosure obligations.
Australian Securities and Investments Commission chairman Greg Medcraft said he held Mr Narev and Ms Livingstone in high esteem, but ASIC had launched investigations.
There were concerns the breaches, which occurred two years ago, had not been disclosed. ASIC should be told of breaches as soon as they became known. “It’s just very disappointing and it’s a problem of culture,” he said. “It’s always better to be more transparent. Share everything you can, don’t hold back.
“You’ve got to think about legal [consequences] but also about broader risks — the reputational risk and the risk of your relationship with your regulator.”