Although Australia’s financial regulator identified “serious concerns” at National Australia Bank (NAB) regarding compliance with the country’s anti-money laundering and counter-terrorism financing (AML/CTF) rules, it won’t fine the bank—for now.
AUSTRAC notified NAB of the deficiencies in a June 4 letter, which the bank acknowledged in a securities filing Monday.
“It is AUSTRAC’s view that there is potential serious and ongoing non-compliance with (NAB’s) … customer identification procedures; ongoing customer due diligence; and compliance” with the country’s AML/CTF program, the regulator said.
Issues with NAB’s AML/CTF controls and procedures date back to 2017, the bank said, when it first reported AUSTRAC had launched an investigation.
AUSTRAC says the issues are “prolonged” but noted NAB self-reported many of them. The regulator said the bank is taking steps to address the problems.
“At this stage, AUSTRAC is not considering civil penalty proceedings to address AUSTRAC’s concerns. This decision is reflective of the work undertaken by the NAB [designated business group] to date. However, this position may be subject to change and you will be notified if that occurs,” the regulator wrote.
NAB, the fourth largest bank in the region, with more than nine million customers at 900 locations, is fully cooperating with the investigation, the bank said.
“NAB takes its financial crime obligations seriously. We are very aware that we need to further improve our performance in relation to these matters,” said CEO Ross McEwan in a statement. “We have been working to improve and clearly have more to do. NAB has an important role in monitoring and reporting suspicious activity and keeping Australia’s financial system, our bank and our customers safe.”
Since June 2017, NAB “has invested about $800 million as part of a multi-year program to uplift its financial crime and fraud controls and has more than 1,200 people dedicated to managing financial crime risks,” the bank said.
NAB is seeking to avoid the fate of the country’s third-largest bank, Westpac, which last year paid a record AUS$1.3 billion (then-U.S. $912.6 million) civil penalty related to a money laundering scandal and the facilitation of child exploitation in the Philippines and Southeast Asia.
Westpac said in September 2020 it had spent AUS$632 million (then-U.S. $443.5 million) on financial crime compliance and made improvements to its technology platforms, personnel, processes, and procedures.
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