AUSTRAC said it is not considering civil penalty proceedings at this stage, a decision made based on the work undertaken by NAB to date.
AUSTRAC has launched a formal enforcement investigation into NAB (National Australia Bank) for AML/CTF violations.
NAB disclosed the investigation in a filing to the ASX, saying it has been informed by AUSTRAC that it has identified “serious concerns” with the bank’s AML/CTF compliance.
In a 4 June letter to NAB, AUSTRAC pointed to “potential serious and ongoing non-compliance” with the bank’s customer identification procedures, ongoing customer due diligence, and compliance with a joint AML/CTF programme at the bank.
“These concerns have been referred to AUSTRAC’s enforcement team, which has initiated a formal enforcement investigation into the compliance of five reporting entities within the NAB DBG [Designated Business Group],” AUSTRAC said.
The five reporting entities are:
- NAB Limited
- JBWere Limited
- Wealthhub Securities Limited
- Medfin Australia Pty Ltd
- AFSH Nominees Pty Ltd
AUSTRAC said its concerns emanate from historical and contemporary compliance assessments. Specifically, the regulator is concerned with the “prolonged period” of the matters disclosed by NAB as well as the accompanying closure rates.
NAB has disclosed the existence of AML/CTF compliance issues in various public disclosures since 2017, including in its most recent half-year financial report for 2021. The AUSTRAC probe indicates that the breaches have not yet been fully remediated four years after the initial disclosure.
Since June 2017, NAB has invested about AUD 800 million as part of a multi-year programme to uplift its financial crime and fraud controls. The bank also has more than 1,200 people dedicated to managing financial crime risks.
“AUSTRAC acknowledges that NAB has invested significantly in programs of work to mature the financial crime risk capability of the NAB DBG,” the letter said. “However, despite this effort and investment over an extended period, AUSTRAC has ongoing concerns as to whether the NAB DBG has the necessary systems and processes to comply with its AML/CTF obligations.”
AUSTRAC said it is not considering civil penalty proceedings at this stage, a decision made based on the work undertaken by NAB to date. “However, this position may be subject to change.”
NAB CEO Ross McEwan said NAB would continue to cooperate with AUSTRAC in its investigations. The bank has already been regularly engaging with AUSTRAC to report issues and keep the regulator informed of its progress to strengthen its AML/CTF programme.
“NAB takes its financial crime obligations seriously,” McEwan said. “We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do.”
“It is a key priority for everyone at NAB to uplift our financial crime capabilities, minimise risk to customers and the bank, and improve operational performance.”
If AUSTRAC decides to take enforcement action against NAB, it can issue civil penalty orders, enforceable undertakings, infringement notices, or remedial directions.
AML/CTF violations have resulted in some of Australia’s largest corporate fines to date. Last year, Westpac paid a AUD 1.3 billion penalty, and in 2018, CBA (the Commonwealth Bank) paid a AUD 700 million penalty.