The Commonwealth Bank of Australia has found itself in a great deal of hot water after Australia's financial intelligence and regulatory agency, Austrac, began civil penalty proceedings against it at the end of last week.
The Australian Transaction Reports and Analysis Centre (Austrac) has alleged that CBA has been involved in "serious and systemic non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, and detailed 53,700 breaches of the Act, which included failing to hand 53,506 threshold transaction reports (TTRs) for cash transactions over AU$10,000 to Austrac through intelligent deposit machines (IDMs) for almost three years between November 2012 and September 2015.
In a response issued on Monday morning, the Commonwealth Bank claimed that much of the blame for the lack of filing was due to a "coding error".
"The issue began after an unrelated software update to the IDMs in late 2012," the bank said. "Following the software update, a coding error occurred which meant the IDMs did not create the TTRs needed. This error became apparent in 2015 and within a month of discovering it, we notified Austrac, delivered the missing TTRs, and fixed the coding issue.
"The vast majority of the reporting failures alleged in the statement of claim (approximately 53,000) relate specifically to this coding error. We recognise that there are other serious allegations in the claim unrelated to the TTRs."
CBA said it is working through Austrac's statement of claim, and will file a statement of defence.
Austrac said the late TTRs counted for 95 percent of threshold transactions across the period in question, and have a total value of AU$624.7 million.
Beyond the TTR claim, Austrac has alleged that for three years, CBA did not comply with its anti-money laundering and counter-terrorism financing program on 778,370 accounts; that the bank failed to report "suspicious matters" on time, or at all, on AU$77 million worth of transactions; and that after becoming aware of laundering, it did not monitor the ongoing risk of doing business with the customers involved.
Elsewhere on Monday morning, CBA boss Ian Narev warned people against jumping to conclusions after these accusations.
"I understand there is very little goodwill for banks in general, and for CBA in particular, so when something like this happens, people jump to conclusions," Narev told The Australian.
The bank theoretically faces a maximum penalty of AU$18 million for each of the 53,700 contraventions if found guilty.
The case is already making waves in Federal Parliament; South Australian Senator Nick Xenophon on Sunday floated introducing legislation to apply criminal sanctions, including jail terms, to the executives of banks "who systemically fail to abide by the rules" on money laundering and terror financing.
CBA will release its full-year results on Wednesday. Its shares closed down 3.9 percent on Friday, wiping about AU$5.5 billion off its market value.