ASB faces $6.73m penalty for breaching money laundering and terrorism laws

ASB chief executive Vittoria Shortt.

ASB could be hit with a $6.73 million penalty after admitting it breached money laundering and terrorism laws.

The Reserve Bank of New Zealand (RBNZ) filed civil proceedings in the High Court against ASB for breaches of core requirements under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009.

ASB admitted liability for all seven causes of action.

It is not alleged that ASB was involved in money laundering or the financing of terrorism.

ASB chief executive Vittoria Shortt said the bank acknowledges and accepts responsibility for breaches of its obligations under the AML/CFT.

“Banks play a very important role in helping to detect financial crime and safeguarding our financial system. 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.”

Both parties have recommended to the court that a penalty of $6.73m is appropriate, though the final determination is for the court to decide.

Angus McGregor, RBNZ’s acting assistant governor of financial stability, said serious non-compliance with the AML/CFT Act was unacceptable.

“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.

“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’s non-compliance relates to its failures to:

• establish, implement, or maintain an AML/CFT programme that complied in all respects with the requirements of the AML/CFT Act;
• adequately conduct ongoing customer due diligence;
• report suspicious activities within the timeframe provided in the AML/CFT Act;
• conduct enhanced customer due diligence;
• terminate business relationships as required by the AML/CFT Act.