The Reserve Bank of New Zealand has initiated civil proceedings in the Wellington High Court against The Co-operative Bank Limited, alleging three breaches of core obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. The alleged non-compliance dates back to at least 2020.
The claim by the Reserve Bank of New Zealand – Te Pūtea Matua concerns the adequacy and effectiveness of The Co-operative Bank Limited’s anti-money laundering and countering financing of terrorism (AML/CFT) framework.
In particular, the regulator alleges the bank failed to ensure its transaction monitoring rules were fully operational, did not carry out sufficient assurance activities to confirm the effectiveness of its account and transaction monitoring systems, and failed to keep adequate records of its monitoring and assurance work, as required under its obligations in the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
The Co-operative Bank Limited allegedly failed to identify higher-risk transactions and customers, carry out timely enhanced due diligence, and keep the records required under the Act.
“This is the second AML/CFT civil proceeding the RBNZ has filed against a reporting entity in the last six months. This enforcement response promotes the AML/CFT Act’s purposes, which are to detect and deter money laundering and the financing of terrorism; maintain and enhance New Zealand’s international reputation; and contribute to public confidence in the financial system,” Acting Assistant Governor of Financial Stability Angus McGregor said.
McGregor said the case once again highlights that prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable.
“The RBNZ expects all banks to have appropriate systems and resources in place to actively monitor customer accounts and transactions, supported by fit-for-purpose testing and assurance to fully comply with the requirements of the Act. These measures are essential to identify and mitigate potential money laundering or terrorism financing risks in a timely manner.”
The Co-operative Bank Limited has acknowledged liability in relation to all three causes of action.
The Reserve Bank and The Co-operative Bank Limited have jointly proposed that a penalty of $1.425 million is appropriate in the case, although the final determination will be made by the court.