CBA to pay $A700m penalty

SYDNEY: Commonwealth Bank has agreed to pay $A700 million ($NZ760 million) to settle the antimoney laundering and counterterrorism case brought by AUSTRAC.

CBA has admitted the 53,506 breaches of which it was accused by the regulator — and to further contraventions — bringing to an end a scandal that led to Ian Narev’s departure as chief executive.

The agreement, which also includes CBA paying $A2.5 million in legal fees, is subject to Federal Court approval.

The civil penalty exceeds the $A375 million that CBA had set aside for the proceedings when it announced its firsthalf results in February, but falls short of the most dramatic analyst predictions of more than $A1 billion.

Investors greeted the settlement positively, pushing CBA shares up 2.3% in the first 15 minutes of trade yesterday.

CBA chief executive Matt Comyn said the lender had not deliberately breached the law by failing to provide the regulator with timely notification of potentially suspicious transactions, but admitted that the bank’s risk procedures and due diligence were not up to scratch.

‘‘While not deliberate, we fully appreciate the seriousness of the mistakes we made,’’ Mr Comyn said in a statement.

‘‘Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward.’’

CBA will record a $A700 million provision in its results for the year to June 30, which will be announced on August 8.

Mr Comyn, who was promoted to replace Mr Narev in April, said CBA had spent more than $A400 million on antimoney laundering compliance measures.

‘‘Banks have a critical role to play in combating financial crime and protecting the integrity of the financial system,’’ Mr Comyn said.

‘‘We have also agreed with AUSTRAC that we will work closely together based on an open and constructive approach.’’ — AAP