Huge cash deposits via ATMs draw AML scrutiny in Australia


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Major Australian bank faces AML Compliance allegations

Commonwealth Bank of Australia has found itself in the glare of intense AML scrutiny after AUSTRAC accused it recently of major breaches in its AML Compliance. According to Australia’s federal regulators, the bank allowed more than 53,000 suspicious transactions to flow through its Intelligent Deposit Machines, or IDMs (similar to ATMs in the U.S.).

AUSTRAC asserts that the bank allowed its IDMs to accept large cash deposits—even deposits exceeding $8,000 U.S.—without conducting KYC or other standard AML scrutiny. In Australia, $10,000 cash (equivalent to $8,000 U.S.) is the amount requiring suspicious-activity reporting to Australian regulators. Authorities also assert that that bank did not remediate the problem fully even after it was warned.

In addition to the IDM cash deposit problems, authorities accuse the bank of a lack of AML monitoring that facilitated money laundering by syndicates, including “a so-called cuckoo smurfing syndicate.” Named after a cuckoo bird that lays its eggs in another bird’s nest, this type of money laundering uses legitimate money transfers into Australia by innocent third-parties who use “alternative remitters.” The remitters, in on the laundering syndicate, work with accomplices to deposit dirty money into the legitimate accounts where it can later be retrieved by the syndicate.

So far, the bank’s president Ian Narev has defended the bank even as a growing chorus calls for his resignation. Australian Senator Nick Xenophon noted that the allegations of over 53,000 suspicious transactions that were not reported by the bank could result in $1 trillion in fines—a sign that he says warrants tougher AML enforcement in Australia and a turn toward the U.S. and British trends of holding senior management personally liable for AML Compliance failures of this magnitude.

The bank, Australia’s largest bank and highly profitable, asserts that the transactions avoided scrutiny due to a software error. Members of the Labor Party and others across the nation have renewed calls for a special commission to investigate AML issues and standards, however others are rejecting that as overreach.

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