Regional bank pinged over money laundering guardrails
Australia’s fifth largest retail bank has been warned by regulators after an investigation found it did not have adequate safeguards against money laundering.
Bendigo and Adelaide Bank hired Deloitte to carry out the review after suspicious activity at one of its branches went undetected for six years until August 1.
The Deloitte review, announced in November, found deficiencies extended beyond a single branch and identified weaknesses in many key aspects of money laundering and counter-terrorism financing risk management.
Now banking, counterterrorism and counterterrorism finance regulators are taking action to address these weaknesses.
The Australian Prudential Regulation Authority is concerned that the weaknesses identified by Deloitte may occur across wider operations.
The Australian Transaction Reports and Analysis Center, or AUSTRAC, shares the authority’s concerns.
As a result, regulators told the bank it had to retain $50 million in additional risk capital and investigate the extent of problems in its operations.
AUSTRAC also launched an enforcement investigation to examine whether Bendigo complied with its obligations under anti-money laundering and counter-terrorism laws.
“Our investigation will examine Bendigo Bank’s compliance with the law and inform AUSTRAC’s further actions,” said AUSTRAC Acting CEO Katie Miller.
APRA said the bank was financially sound and comfortably above core capital and liquidity requirements.
However, he is concerned that there may be significant gaps in the risk management framework that need to be urgently addressed.
“The measures we are announcing today with AUSTRAC aim to ensure that key deficiencies in Bendigo Bank’s risk management framework are identified and addressed and those responsible are held appropriately to account,” said Chairman John Lonsdale.
Bendigo, which itself reported the initial problems, said it recognized the need to intensify its efforts and had already taken steps to improve its risk culture.
“The bank recognizes that sound risk management practices are critical to ensuring the bank can continue to protect its customers,” said President Vicki Carter.
