National Australia Bank has again flagged that it has fallen short of its obligations on anti-money laundering and counter terrorism financing, but is yet to detail the scope of any potential wrongdoing or fallout.
NAB chairman Philip Chronican on Wednesday told investors the bank had not always met “100 per cent of (the) requirements” set out by financial crime watchdog AUSTRAC, but that it was working with the regulator to sort through the as-yet unspecified issues.
“The board is acutely aware of the risk that our banking services could be used by those with criminal intent and takes its obligations … very seriously,” Mr Chronican told the bank’s annual general meeting in Sydney.
“Inevitably, given the millions of customers we have and the millions of transactions we process, there will be times when our processes fall short.”
AUSTRAC is already pursuing NAB’s big four rival Westpac over an alleged 23 million breaches of money laundering laws between 2013 and 2019 – including a failure to properly monitor payments potentially linked to child sex offences in Southeast Asia.
NAB had flagged in its 2019 annual report it may have breached counter terrorism and anti-money laundering laws on several occasions, raising the prospect of further remediation and a huge fine.
The lender has already provided documents and information to the financial intelligence watchdog.
Commonwealth Bank was fined a record $700 million fine in 2018 for serious breaches of the same laws.
Mr Chronican said the bank will continue to do “whatever is required” to improve compliance.
“More broadly, open material risk issues have reduced significantly in 2019,” he said.
Wednesday’s meeting in Sydney – the first time Ross McEwan has fronted NAB investors as the bank’s chief executive – comes a day after the firm was hit with legal action from ASIC over its fees-for-no-service scandal.
The corporate regulator says the bank charged financial planning fees from December 2013 to February 2019 on a large number of customers without providing them with any services, breaching its duty as an an Australian Financial Services licence holder to act efficiently, honestly and fairly.
NAB is also accused of engaging in “unconscionable conduct” by continuing to charge the fees from May 2018, when it knew it had not delivered the services, only stopping them in February.
The maximum penalty for the alleged misconduct ranges from $250,000 to $2.1 million per violation of the law, the Australian Securities and Investment Commission said.
Mr McEwan accepted the role in July after NAB had been looking for a new boss since February, when Andrew Thorburn quit after being criticised in the financial services royal commission final report.
Mr Chronican is now the bank’s chairman, replacing Ken Henry, who was also singled out for his role in the bank’s reputational implosion.
NAB will also be hoping to avoid a second strike on executive pay.
AAP