Photo: RNZ / Marika Khabazi
The Reserve Bank has filed legal action against ASB Bank for breaches of the anti-money laundering rules over the past five years, and agreed on a multi-million dollar penalty.
The central bank said ASB admitted to seven breaches of the anti-money laundering and countering financing terrorism rules (AML/CFT), including not having an appropriate due diligence process for checking the background of customers, not doing the necessary checks on customers, not advising authorities about suspicious activity, and not ending business links as required.
ASB and the RBNZ agreed on a penalty of $6.7 million, although the final amount will be set by the High Court.
The RBNZ's acting Assistant Governor of Financial Stability, Angus McGregor, said the legal action was an important reminder to industry that serious non-compliance was unacceptable.
"The AML/CFT Act has been in place for well over a decade now and the Reserve Bank expects banks to have the systems and resources in place to be fully compliant with these requirements.
"Non-compliance with account monitoring and reporting requirements denies New Zealand law enforcement and intelligence agencies access to crucial time-sensitive information that is needed to detect and deter criminal activity," he said.
McGregor said there was no suggestion that ASB had been involved in money laundering.
ASB apologises for 'shortcomings'
ASB chief executive Vittoria Shortt said it accepted that banks had an important role in helping to detect financial crime.
"Our transaction monitoring and customer due diligence systems and processes had shortcomings, and we did not act fast enough to resolve these. We didn't get this right and I apologise for that."
"We cleared all backlogs of transaction monitoring alerts by February 2024. We have uplifted, and continue to uplift, our processes to improve our AML-CFT capability, including expanding our teams and investing in technology," Shortt said.
Other financial groups to be hit for AML/CFT breaches in recent years include the Christchurch casino, Sky City Entertainment, TSB Bank, several smaller financial services firms, while Westpac has been warned.
Supervision of the AML/CFT laws is currently splintered between the RBNZ, the Financial Markets Authority, and the Department of Internal Affairs, which will become the sole supervisor next year.
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