This study describes Commonwealth Bank of Australia (CBA), its money laundering and fraudulence. It is an integrated financial service provider operating in Australia, New Zealand, Europe, and the Asia-Pacific region that has been accused of rupturing the Anti-Money Laundering and Counter-Terrorism Financing. Being Australia’s biggest bank by assets, Commonwealth Bank encountered money laundering scandal due to its inadequate monitoring of transactions. According to (Hannah.T, 2013), this eventually led to the flow of the millions of dollars to the drug importers for which the bank had to pay the largest fine in the corporate history of Australia. For its systemic failures, AUSTRAC has accused the bank to pay $ 700 million excluding the legal costs on the account of suspicious deposits, transfers and accounts which has affected all its stakeholders. CBA has been fined several times the market value of the bank. It is also dedicated to meet its global regulatory responsibilities for identifying, treating and managing of Money Laundering or the Terror Funding risk.
(Ahmed, 2012), claimed that the scope of money laundering activities has increased contributions to the disruptions of the financial system. The study analyzes the unethical or grossly incompetent conduct from the organizational failures. This topic is very important to understand the behavioral issues prevailing in the Commonwealth Bank of Australia and hence chosen because this is time relevant one. For a period of three years, the bank failed to properly monitor the transactions as intended for which it is held accountable as there is an uphold in the drug deals.This study also highlighted about the official investigation conducted by Australia’s financial intelligence and regulatory agency, Corporate regulator ASIC (Australian Securities and Investments Commission), and the banking regulator, APRA (Australian Prudential Regulation Authority) for its accountability.Finally,the market approval was given to the deal and the regulators were allowed to professed their victory as accused of its unethical activity.
Samuel. (2013). Tracing the Interplay between Transnational Organized. The Combating terrorist finance , 458-511.
The basic premises of the articles underscores the criminal proceedings are varying in the national and international framework as the money launderer shift their activities in jurisdictions with few or ineffective measures against money laundering. The author argued that the money launderers make unlawful cash perish in a series of online accounts. The methods used by the criminals to launder are to be understood to combat the money laundering and terror financing in any financial institutions. However, these improper regulations and maintenance of records destabilize the financial institutions making the challenges faced by the investigators and prosecutors seem infinite. Commonwealth Bank of Australia has been encountered with these financial risks due to its negligence towards the proper monitoring of the transactions and maintaining of records. CBA has violated the laws and regulations which made them accountable for the scandal. The intense of the issue is more than what the bank expected it to be. It is always important to determine whether financial and other institutions implementsupervision and internal control in the field of money laundering prevention.Thus, these situations clearly depict that the Anti-money laundering standards are not always implemented by the financial institutions and these laws and regulations are not enforced by the authorities.
Makarenko.S. (2015). Unethical behaviour of the financial organization. The Combating terrorist finance , 56-78.
The basic premises of the article are that there are certain significant violations by the bank. Without any mitigation procedures and risk assessments, CBA introduced Intelligent Deposit Machines which assisted criminals to use these features to launder cash. Also, the author desccribed that CBA was warned about the risks involved in money laundering, money laundering was minimized by keeping daily limits on the accounts, but was declined by the institution. However, the major reason was CBA’s negligence in providing transaction reports regarding the cash deposits within ten business days greater than$10,000. CBA hasn’t updated the software to pick up a new code created for IDM deposits which caused a failure due to the coding error. This violation counted all about 53,506 transactionstotalingabout$625 million. Also, by apparently misunderstanding the legal obligations of CBA, it was unsuccessful to report transactions with a sequence of money-laundering. It was negligent in reporting about the identity fraud in relation to eight money-laundering syndicates. This eventually led to the foundation of several million dollars of crime proceed in connection withimporting and distributing drugs. Despite being warned by the law enforcement, CBA failed to monitor 778,370 accounts. Thus, the bank deliberately or intentionally contravened its legitimate obligations under the relevant laws.
Peng, W. (2012). Scandal hit sectors in the financial institutions. The Crime-Terror in finance industry , 11-29.
The basic premises of the article is that Australia’s banking and financial service sector has been hit by a series of scandals of which CBA is one of the most popular money laundering scandals. Almost 20 million records of the people are lost by the bank which has forced to be informed to the stakeholders about the outstanding liabilities related to this anti-money laundering case. It has failed to monitor the suspected terrorist financiers which made them agree to pay the largest civil penalty in the corporate history. For the misconducts like the scandals in the finance industry, the government launched a royal commission to accuse the institutions to pay potential penalties. The scandal hit sectors are increasingly growing despite the obligations that allow criminals to exploit its systems and put the Australian community at risk. As an outcome of this strong argument, it is made to understand that the financial industry non-compliance with anti-money laundering and counter-terrorism financing laws would not be tolerated. However, the Commonwealth Bank of Australia later decided to admit most of the alleged breaches and try to reach a settlement.Thus, it is proved that the scandal-hit sectors are misused by the criminal syndicates to import and distribute their drugs.
Stuart, H. (2017). impact on the policies and procedures of the financial institutions. Transactional Monitoring problems , 56-89.
It is discussed in the article that the apparent failure for the Commonwealth Bank of Australia and its money laundering scandal is improper monitoring of transactions. Inspite of being warned for its financial risks, The uathor argued that CBA took no measures to control them which have eventually taken all along to pay several million as a penalty. AUSTRAC, the anti-money laundering regulator discovered a suspicious move from CBA and its transaction monitoring process over its smart ATMs. It wasn’t aware of any formal investigations or actions in spite of communicating with the overseas regulator. Also, the major headache for the institution is the discovery process at CBA. In 2015, CBA lacked automated transaction monitoring (TM) in leasing,debt capital markets and institutional lending in Australia and across Singapore, Hong Kong, Shanghai, Tokyo, London and New York. It was suffering in times of bank’s access to US dollar clearing. Thus, these potential vulnerabilities made the AUSTRAC regulator indulge in civil actions. A proper monitoring of all the transactional problems faced by the banks and a quality internal review would have saved the financial institution from the scandal. Thus the coding errors defense in the transactional monitoring of the Australian banks explaining the collective failure of the technology and the auditing system were the reason for the money laundering practice.
Throne, K. (2014), Suppressing terrorist-financing and money-laundering. Terrorist organization and anti money laundering, 23-56.
The article contrasted to the view that only because of the unethical and grossly incompetent conduct of Commonwealth Bank of Australia, it has been accused of the money laundering scandal. Until then people had own possession of the mortgage, insurance policy or regular savings account with CBA. This case was formally investigated by various regulators after detecting a suspicious act from the end of the financial institution. The amount CBA being penalized seems to be more when compared to other banks who have deliberately flouted money-laundering laws. This misconduct wasn’t paid by the individualwho acted wrongly but it is recompensed by the bank, then ultimately by the shareholders. These financial risks were due to several reasons including failing to properly carry out risk procedures and customer monitoring. It has also filed late 53,506 transaction reports for cash deposits through its intelligent deposit machines with insufficient risk evaluation requirements for the ATM.Fact is that if the court approves the fine; it will be the largest civil penalty in the corporate history of Australia.Later, the bank has implemented a broad program to improve operational risk management and deference at the bank. Thus, combatting the money laundering practice decreases the opportunity for the terrorists to support attacks enabling the organized crime group to indulge in illicit funds.
Conclusion
Every financial organization has to rely on the investigative and analytical intuition to get rid of the possibilities for any financial frauds such as money laundering. It is necessary to act proactivelyin any situation. According to (Michael, 2015), every financial recordhasto be potentially valued as evidence of financial crime or transactions, or to enhance other parts of an investigation as they are the gatekeepers of information of any financial activities of the terrorist.CBA has paid a huge amount for its acquisition of money laundering process due to its irregular monitoring of the transactions and abuse of anti-money laundering and counter-terrorism laws of finance.The Australian scandal-plagued financial sector is at the center of a national inquiry into misconduct. AUSTRAC encountered the suspicious monitoring of transactions by CBA and so it agreed to fine the financial institution following court-ordered mediation. Thus, when the smart ATM machines in CBA failed to automatically report the transactions due to the coding error, the breaches happened and has increased the opportunitiesfor the terrorist to support attacks.And these five journal articles are chosen to exhibit the various attributes of the case study on the money laundering practice in Commonwealth Bank of Australia due to its improper transaction monitoring.
Reference List
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Makarenko.S. (2015). Unethical behaviour of the financial organization. The Combating terrorist finance , 56-78.
Michael, C. (2015). A brief introduction on Terror financing. Combatting terrorist finance , 69-89.
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Peng, W. (2012). Scandal hit sectors in the financial institutions. The Crime-Terror in finance industry , 11-29.
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Stuart, H. (2017). impact on the policies and procedures of the financial institutions. Transactional Monitoring problems , 56-89.
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