Commonwealth Bank of Australia has blamed a software coding error for more than 50,000 alleged breaches of money-laundering and terrorist-financing laws.
The error went undetected for almost three years, the Sydney-based bank said in its first detailed response after being sued on Thursday by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
The nation’s financial crime agency alleged the bank failed to report on time or at all suspicious transactions totaling more than A$624 million (US$497 million). The bank also failed to monitor suspected money laundering even after being alerted by law enforcement agencies, AUSRAC said.
“In an organization as large as Commonwealth Bank, mistakes can be made,” the lender said in a statement yesterday.
A software update to the bank’s automated cash-deposit machines in late 2012 introduced a “coding error,” which meant the machines did not create the required reports.
When the error was finally discovered in 2015, the issue was fixed and AUSTRAC was alerted within a month, the lender said.
The bank said the vast majority of about 53,000 reporting failures alleged by AUSTRAC relate specifically to the coding error, though “there are other serious allegations” unrelated to the reporting requirements.
Banks are required to report to the agency any cash transactions of A$10,000 or more within 10 business days.
The allegations are the latest in a series of scandals in Australia’s banking industry — from giving poor advice to wealth-management customers to allegations the nation’s three other biggest banks manipulated a benchmark swap rate. The opposition Labor party has jumped on the money-laundering claims to bolster its calls for a far-reaching inquiry into the banks.
“The prime minister must surely accept now that the scandals, rips-offs, misconduct, unethical conduct and allegations of illegal activity just never seem to end,” Labor spokeswoman for financial services Katy Gallagher said in a statement.
Greens party Senator Peter Whish-Wilson called for the board to cancel all senior executive bonuses and to make a statement on CEO Ian Narev’s future.
“A coding error does not explain allegations about the company being slow to deal with regulator requests or explain delays in dealing with serious concerns raised by staff,” Whish-Wilson said in a statement. “If you keep denying there are cultural issues, you will never deal with them.”
Narev on Sunday said he has no intention of resigning over the issue and the case shows the “deep and strong oversight’’ the industry is under.
“I’m focused on doing my job and am not spending any time on thinking about my own position,’’ he told the Australian newspaper.
Commonwealth Bank shares rose 1 percent in Sydney trading yesterday, rebounding from biggest decline in 18 months on Friday, when they fell 3.9 percent.
The bank faces a maximum penalty of A$18 million per breach.
Gaming company Tabcorp Holdings Ltd in March agreed to pay A$45 million to settle 108 breaches of the legislation, the biggest civil corporate penalty in Australia.
The case is also set to overshadow the bank’s full-year results tomorrow, when it is forecast to report a record annual profit of A$9.8 billion, according to the median estimate of 12 analysts surveyed by Bloomberg.
AUSTRAC’s suit “raises further concerns about conduct,” Morgan Stanley analyst Richard Wiles said in a note to clients. “Potential implications include material penalties, brand damage, higher costs, management changes, adjustments to strategy, and further scrutiny from APRA, politicians and the community.”
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such
SENSOR BUSINESS: The Taiwanese company said that a public tender offer would begin on May 7 through its wholly owned subsidiary Yageo Electronics Japan Yageo Corp (國巨), one of the world’s top three suppliers of passive components, yesterday said it is to launch a tender offer to fully acquire Japan’s Shibaura Electronics Co for up to ￥65.57 billion (US$429.37 million), with an aim to expand its sensor business. The tender offer would be a crucial step for the company to expand its sensor business, Yageo said. Shibaura Electronics is the world’s largest supplier of thermistors, with a market share of 13 percent, research conducted in 2022 by the Japanese firm showed. If a deal goes ahead, it would be the second acquisition of a sensor business since
RSS