Choose a recent news/media article that has been published within the last 3 months that concerns a business ethics issues and discuss about it.
Ethics is defined as the branch of philosophy in context of all the aspects related to the human behavior. Ethics is considered as the broad term which determines the rightness and wrongness of any action conducted by individual, and there are number of theories through which it is determined. Business ethics is also known as the corporate ethics, and it is considered as the form of applied and professional ethics which mainly examines the ethical and moral principles and issues that resulted from the business environment. It is also defined as the written and unwritten codes of the principles and values which are determined through the culture of the organization that govern the decisions and actions within the organizations. It is applied on all the aspects of the business operations in context of both individual and the whole company (Norman, n.d.).
This paper mainly focuses on the news article published by ABC on 4th June 2018 and name of this article is “Commonwealth Bank of Australia to pay $700 million over anti-money laundering and counter-terrorism law breaches”. On the basis of this article, numbers of questions are answered. Lastly, paper is concluded with the brief conclusion.
The Commonwealth Bank of Australia (CBA) imposed with the biggest fine in the corporate history of Australia in context of breaching the laws related to the anti-money laundering and counter-terrorism financing, and this fine resulted in the millions of dollars. CBA agreed to pay this fine, as bank pay $700 million which also includes the legal costs after the accusation made by the federal financial intelligence agency AUSTRAC in last year. This agency accused the bank in lieu of serious and systematic failures for reporting the doubtful deposits, transfers, and accounts.
In terms of the settlement, CBA admitted the allegation related to the late filing of 53,506 reports of transactions of $10,000 or more by the way of “intelligent deposit machines” (IDMs). Later, bank decided to admit maximum breaches alleged by the agency (The Guardian, 2017).
It is necessary for the CBA to file report related to these large transactions within the period of 10 business days, so that AUSTRAC can monitor them to check in case money going to crime gangs or terrorist networks. Originally, CBA challenge the number of allegations made by the AUSTRAC, and present the argument that single coding error result in the failure of reporting the 53506 transactions.
For the period of 3 years, bank also failed in monitoring the transactions on 778,370 accounts for the purpose of checking the money-laundering red flags. Bank also admits the 149 suspicious matters which were filed late or not filed at all. Additionally, bank also breach its obligations to perform the checks on 80 suspicious customers and transaction monitoring dis not operate in such manner as intended related to the number of accounts between the periods of 2012-2015 October.
Investigation is also conducted by the AUSTRAC and exposed 14 occasions in which CBA failed to assess the risk in proper manner in context of IDM’s. While number of transactions are related to the legitimate purposes, and the bank has admitted that it failed to report the millions of dollars which suspect the money laundering. AUSTRAC suspected that some other transactions are also there which are not detected in context of money laundering through the accounts of CBA (Reuters, 2018).
Money laundering is considered as the process through which criminal attempt is made by the business to hide the true origin and ownership of the proceeds of their criminal activities. In case activities are undertaken in successful manner, and it allowed them to maintain the control over those proceeds and ensure legal cover for the source of their income (ICPAP, n.d.).
Money laundering inclines the allocation of the dirty money across the globe in context of avoiding the national controls and therefore polluted the money tends that flow to countries with less stringent controls. Large number of effect is imposed by the money laundering on the business organizations that were used for the purpose of crime. It must be noted that integrity of the bank and their financial services are based on the professionalism and ethical standards, and the reputation of the organization is considered as the most valuable assets in terms of the financial business. Business ethics play most important role in maintaining and enhancing the reputation of the business. Ethical code of conduct ensures that financial business is conducting all their operations in legal and ethical manner. In case financial business is manipulated through the schemes of the money laundering, then business organization is used by the criminals and business itself becomes the part of the criminal network. Terrorism is the biggest issue which faces by the society and if any business involved in the money laundering then it can be considered that such business is supporting the terrorism activities. This approach of the financial institutions also damage the reputation of other institutions involved in similar industry, and also breach the trust of customers. Customers and society consider that business untrustworthy and this will ultimately results in the loss of profitability and customer base, and no one prefer to do business again with these corporations. Money laundering mainly ensures the corruption and crime and also damages the society’s integrity and also undermines the democracy and rule of law. In context of the present case, activities of the CBA fall under the money laundering prospect and clearly states that bank is involved in the unethical practices and fails to fulfill its duty towards the society.
Bank play most important role in fighting the crime related to financial transactions and also protects the integrity of the financial system of the country. For gaining this position, CBA also agreed with the view point of the AUSTRAC that they must work together for resolving the issue highlighted above. For the purpose of reaching this position, CBA also agreed to make necessary changes which are sated in the recent years as part of the comprehensive program and for improving the operational risk management and compliance. For breaching the laws, AUSTRAC imposed the penalty of $700 million on the CBA. This penalty is the biggest penalty imposed on any organization in the corporate history of the Australia (NZherland, 2018).
In my opinion, this financial penalty imposed on the CBA is sufficient and it justified the actions conducted by the CBA in context of money laundering laws. However, an activity conducted by the CBA promotes and encourages the criminal activities, and this offense of the CBA cannot be justified only through the criminal prosecution. Court fails to provide any criminal prosecution to the involved persons in this context, and this makes this decision ethical. Therefore, from my point of view this decision is not ethical in nature and must involve criminal prosecutions also.
Following is the ethical decision making process on the basis of the seven moral philosophies which must be used by the CBA for ensuring ethical standards:
Conclusion:
Above stated facts clearly reflects the ethical standards important while conducting any activity of the business. Business ethics play most important role in maintaining and enhancing the reputation of the business. Ethical code of conduct ensures that financial business is conducting all their operations in legal and ethical manner. In case financial business is manipulated through the schemes of the money laundering, then business organization is used by the criminals and business itself becomes the part of the criminal network. This approach of the financial institutions also damage the reputation of other institutions involved in similar industry, and also breach the trust of customers.
References:
Dion, M. (2015). “Is money laundering an ethical issue?”, Journal of Money Laundering Control, Vol. 18(4), pp.425-437.
Ethics Unwrapped. Moral Philosophy. Available at: https://ethicsunwrapped.utexas.edu/glossary/moral-philosophy. Accessed on 8th June 2018.
ICPAP. Anti-Money Laundering Measures and Business Ethics. Available at: https://www.icpap.com.pk/frontend/web/attachments/study%20notes/Anti%20Money%20Laundering%20measures%20and%20Business%20Ethics.pdf. Accessed on 8th June 2018.
Kilkauer, T. (2012). Seven Moral Philosophies of Management. Available at: https://link.springer.com/chapter/10.1057%2F9781137032218_3. Accessed on 8th June 2018.
Norman, W. Business Ethics. Available at: https://www.hbs.edu/faculty/conferences/2016-newe/Documents/Norman,%20Business%20Ethics,%20IntEncycEthics.pdf. Accessed on 8th June 2018.
NZherland, (2018). Commonwealth Bank of Australia to pay $759 million over anti-money laundering and counter-terrorism law breaches. Available at: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12064241. Accessed on 8th June 2018.
Reuters, (2018). UPDATE 1-Commonwealth Bank of Australia denies most new claims in money-laundering case. Available at: https://www.reuters.com/article/australia-cba-moneylaundering/update-1-commonwealth-bank-of-australia-denies-most-new-claims-in-money-laundering-case-idUSL4N1QC5Q5. Accessed on 8th June 2018.
The Guardian, (2017). Commonwealth Bank accused of more anti-money laundering law breaches. Available at: https://www.theguardian.com/australia-news/2017/dec/14/commonwealth-bank-accused-of-more-anti-money-laundering-law-breaches. Accessed on 8th June 2018.
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