National Australia Bank has again flagged it fell 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 admission at the bank’s annual general meeting in Sydney comes a day after corporate watchdog ASIC announced it was suing the lender over its fees-for-no-service scandal.
NAB had already acknowledged in its 2019 annual report that it may have breached counter terrorism and anti-money laundering laws on several occasions, raising the prospect of further remediation and a huge fine.
It said it has provided documents and information to the financial intelligence watchdog.
AUSTRAC is also 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.
Mr Chronican said NAB will continue to do “whatever is required” to improve compliance and said that open material risk issues had “reduced significantly in 2019”.
“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 said.
“Inevitably, given the millions of customers we have and the millions of transactions we process, there will be times when our processes fall short.”
Commonwealth Bank was fined a record $700 million fine in 2018 for serious breaches of the same AUSTRAC laws.
Wednesday’s meeting in Sydney – the first time Ross McEwan has fronted NAB investors as the bank’s chief executive – follows legal action from ASIC over the 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.
NAB shares slipped 1.14 per cent to $25.18 after 20 minutes of trade on Wednesday against a broadly flat open for the benchmark ASX/200.
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 after another tough year that included a reduced final dividend after its full-year profit dropped 10.6 per cent to $5.1 billion.
The bank’s result was dragged down by its retail and wealth unit along with $1.1 billion in remediation provisions.
-AAP
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