Neil Sands
The High Court has ordered ASB Bank to pay a $6.731 million fine for anti-money laundering breaches, a penalty the Reserve Bank says is the largest ever imposed for compliance failures of this type.
The Reserve’s assistant governor Angus McGregor said the fine’s size reflected the seriousness and prolonged nature of ASB’s noncompliance with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009.
“ASB’s transaction monitoring system and AML/CFT programme were inadequate for approximately six years, which is unacceptable,” he said.
“Transaction monitoring is a key pillar to detect money laundering and terrorism financing. It is incumbent on banks to ensure their systems and processes are robust and sufficiently recognise and mitigate these risks.”
The fine could have been higher. ASB agreed with the Reserve on a starting point of $8.975 million after it admitted to seven breaches of the AML legislation, but High Court Judge Laura O’Gorman applied a 25% discount to reflect the bank’s co-operation and early admissions.
The breaches took place between December 2019 and February 2024, involving failures on numerous fronts, including customer due diligence, mitigating risks, managing compliance, reporting suspicious activity and terminating business relationships when required.
“[ASB] acknowledges that it failed to play its role in helping to detect financial crime and safeguarding New Zealand’s financial system,” Justice O’Gorman said in a written decision.
“ASB’s failures were serious and took place over an extended period, and it accepts it did not act fast enough to resolve the problems. ASB has publicly apologised, admitted responsibility for its failures and undertaken remediation. It has improved its AML/CFT systems and processes and has kept the Reserve Bank updated about these developments.”
ASB chief executive Vittoria Shortt said the bank had taken responsibility for its shortcomings in transaction monitoring and customer due diligence.
“We accept we didn’t act fast enough to resolve the issue and I apologise for that,” she said. “We cleared all backlogs of transaction monitoring alerts by February 2024 and have had no backlogs since. We have uplifted, and continue to uplift, our systems and processes to improve our AML/CFT capabilities.”
The Reserve Bank is one of three agencies that currently share responsibility for AML/CFT regulation, along with the Department of Internal Affairs (DIA) and the Financial Markets Authority (FMA).
The DIA will take sole responsibility from next month.
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