Bank faces proposed $6.73m penalty
The Reserve Bank of New Zealand has filed civil proceedings in the High Court against ASB Bank over “serious non-compliance” with core anti-money laundering and counter-terrorism financing obligations dating back to at least December 2019.
The action alleges ASB breached key requirements of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 across multiple areas, including its compliance programme, customer due diligence and suspicious activity reporting.
The case comes shortly after ASB agreed to pay $135.6m to settle a separate CCCFA class action over lending disclosure issues between 2015 and 2019, a settlement reached without any admission of liability.
Multiple failings under AML/CFT regime
According to the Reserve Bank, ASB’s non-compliance relates to failures to:
- establish, implement, or maintain an AML/CFT programme that complied in all respects with the Act
- adequately conduct ongoing customer due diligence
- report suspicious activities within the required timeframe
- conduct enhanced customer due diligence
- terminate business relationships as required under the AML/CFT Act
Acting assistant governor of financial stability Angus McGregor (pictured left) said the case should serve as a clear signal to the 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 in a media release.
“Banks who do not comply increase risk for New Zealanders and our financial system. Non-compliance with account monitoring and reporting requirements denies New Zealand law enforcement and intelligence agencies access to crucial time-sensitive information that is needed to detect and deter criminal activity.”
ASB admits liability, court to decide penalty
ASB has co-operated with the Reserve Bank and admitted liability for all seven causes of action.
In a statement, ASB said it “acknowledges and accepts responsibility for breaches of its obligations under the Anti-Money Laundering and Countering Financing of Terrorism (AML-CFT) Act raised by the Reserve Bank of New Zealand,” with ASB CEO Vittoria Shortt (pictured right) apologising that “our transaction monitoring and customer due diligence systems and processes had shortcomings, and we did not act fast enough to resolve these.”
The parties have agreed to jointly recommend a civil penalty of $6.73 million, although the final decision rests with the High Court.
The Reserve Bank said its enforcement response is intended to promote the purposes of the AML/CFT Act, 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.”
It is not alleged that ASB was involved in money laundering or the financing of terrorism. As the matter is now before the Court, the Reserve Bank will not be making further comment.
In determining its response, the Reserve Bank applied its Enforcement Principles and Criteria Guidelines, which are available on its website.
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