The ASB Bank has acknowledged liability for seven distinct breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act).
The Reserve Bank of New Zealand has launched High Court action against ASB Bank over violations of anti-money laundering regulations dating back to 2019.
Both the bank and regulator proposed a $6.73 million fine.
The breaches of “core requirements,” dating back to at least December 2019, involved inadequate due diligence, untimely reporting of suspicious activities as required by law, and insufficient compliance programmes.
Reserve Bank acting assistant governor for financial stability, Angus McGregor, stated that the action against the Commonwealth Bank subsidiary ASB signals a warning to the entire banking sector.
“The AML/CFT Act has been in place for well over a decade now, and the Reserve Bank expects banks to have the systems and resources in place to be fully compliant with these requirements,” McGregor said.
He said that banks failing these requirements deprive police and intelligence agencies of vital information essential for capturing criminals.
“Banks who do not comply increase risk for New Zealanders and our financial system.”
ASB lacked proper systems to monitor for money laundering as required by law, failed to perform mandated enhanced checks on high-risk customers, and did not terminate relationships with certain clients when obligated to do so.
“Our transaction monitoring and customer due diligence systems and processes had shortcomings, and we did not act fast enough to resolve these. We didn’t get this right, and I apologise for that,” ASB chief executive Vittoria Shortt said.
“We cleared all backlogs of transaction monitoring alerts by February 2024.”
“We have uplifted, and continue to uplift, our processes to improve our AML/CFT capability, including expanding our teams and investing in technology.”
The Reserve Bank was not claiming ASB laundered money or funded terrorism itself.
ASB fully cooperated with the investigation and admitted all breaches, leaving the final penalty decision to a High Court judge.