31 Aug 2021

TSB Bank penalised for breaching anti-money laundering rules

5:00 pm on 31 August 2021

The TSB Bank has been penalised $3.5 million for breaches of anti-money laundering rules.

Sign for TSB Bank

Photo: RNZ / Claire Eastham-Farrelly

The Reserve Bank (RBNZ) brought the case after TSB failed to fix faults in its systems that it was warned about in 2016, with what the RBNZ called an "inadequate and ineffective" effort to fix the faults.

Deputy RBNZ governor Geoff Bascand said TSB had failed to comply with fundamental parts of the law.

"While TSB has now embarked on a remediation programme, these proceedings were an escalated regulatory response by the Reserve Bank to ongoing non-compliance by TSB following a formal warning issued to TSB in 2016."

The RBNZ and TSB agreed on the facts and on a proposed penalty to be agreed by the court.

TSB was not involved in money laundering or financing terrorism but it did not have proper systems to ensure it was complying with the law.

Other breaches included not doing the necessary risk assessment on land deals, and not having regard to some of the countries it did business with.

The RBNZ told TSB as far back as 2013 to improve its compliance, and formally warned the bank in late 2016 about its deficiencies and lack of progress in fixing them.

"The AML/CFT Act came into effect eight years ago and we expect firms to be aware of, and to comply with, their obligations," Bascand said.

TSB chair John Kelly said the bank was disappointed to be subject to the charges and penalty.

"While it was not alleged any money laundering or financing of terrorism had occurred through the bank and customers have not been put at risk, TSB acknowledged that it needed to address some areas of AML/CFT compliance and a significant work programme has been in place to do this over the past two years."

He said there was still work to do but had made progress and was "committed to raising the bar in its compliance management and risk maturity".

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