Australian NAB reveals anti-money laundering investigation, stocks drop By Reuters

Australian NAB reveals anti-money laundering investigation, stocks drop By Reuters


© Reuters. FILE PHOTO: The National Australia Bank logo is displayed in central Sydney, Australia August 4, 2017. REUTERS / David Gray

By Paulina Duran

SYDNEY (Reuters) – The National Australia Bank (OTC 🙂 said on Monday it was under investigation for alleged serious and continuing violations of anti-money laundering and anti-terrorism laws, raising concerns over potential fines and higher compliance costs.

The financial crime regulator said there were “areas of serious concern” that needed further investigation, but that it did not at this stage consider ordering a civil sanction.

Shares of Australia’s third-largest lender fell 2.6% in morning trading, while the broader market was little changed.

The Australian Transaction Reports and Analysis Center (AUSTRAC) said the NAB’s problems involved “a potential serious and continuing non-compliance” with customer identification procedures, customer due diligence and other compliance requirements. .

“AUSTRAC’s concerns emanate from historical and contemporary compliance assessments,” the agency said in a letter to the lender dated June 4.

“In particular, the seriousness of the self-disclosure cases brought to AUSTRAC over an extended period of time, combined with the associated closure rates, is of concern.”

The investigation would now be handled by AUSTRAC’s law enforcement team, the agency said. He had not decided whether further execution measures would be taken and did not consider bringing civil proceedings at this stage.

This “mirrored the work” undertaken “by the NAB to date, but the regulator’s position could change, the letter added.

The NAB said it would continue to cooperate with the regulator.

“The NAB plays an important role in monitoring and reporting suspicious activity and in the security of Australia’s financial system, our bank and our customers,” Chief Executive Officer Ross McEwan said in a statement.

“We are very aware that we still need to improve our performance on these issues. We have been working to improve and we clearly have more to do.”

AUSTRAC has imposed penalties of A $ 2 billion ($ 1.5 billion) on NAB’s largest peers – Commonwealth Bank and Westpac Bank (NYSE 🙂 Corp – for violating anti-money laundering rules since 2018.

The escalation of AUSTRAC’s investigation could have significant consequences for the NAB, such as higher compliance costs, analysts at JPMorgan (NYSE 🙂 said in a note.

Swiss credit (SIX 🙂 Analysts told clients in a memo that the market is likely to “reject” the regulator’s statement that it is not considering financial sanctions.

“In our view, the risk lies not so much in the issues highlighted as in the potential for a formal investigation to uncover additional issues that we have seen in other cases,” they wrote.

($ 1 = Australian dollar 1.2925)

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