CEO Barbara Chapman says ASB has 'found no evidence of any problems' in probe of its anti-money laundering compliance processes in wake of Aussie parent's woes

ASB CEO Barbara Chapman says the Reserve Bank is questioning New Zealand banks about their ATMs in the wake of the court action taken by Australia's anti-money laundering regulator against ASB's parent Commonwealth Bank of Australia (CBA).

"The Reserve Bank has sent out, in the last couple of days, a survey to all New Zealand banks because they have some questions around what different limits are and different machines and that sort of thing," Chapman told interest.co.nz.

"In terms of the actual AML [anti-money laundering] regulations, the Reserve Bank always has that on their agenda."

"From where I am I'm quite comfortable with how we are responding.The Reserve Bank are not saying that they are singling ASB out," Chapman added.

A Reserve Bank spokesman said the regulator is surveying all institutions that are supervised by the Reserve Bank for anti-money laundering compliance.

"When we have our regular AML discussions with those institutions, Smart ATMs will be on the agenda," the Reserve Bank spokesman said.

AUSTRAC files court case against ASB's parent

In Australia AUSTRAC last week announced it had initiated civil penalty court proceedings against CBA for "serious and systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006." Among other things, AUSTRAC says for three years CBA didn't comply with the requirements of its anti-money laundering programme relating to monitoring transactions on 778,370 accounts.

For its part, CBA says it takes AUSTRAC's allegations very seriously and it will file a defence. CBA notes AUSTRAC claims some 53,000 transaction reports were filed late. But it says all these "alleged contraventions" arose from the same systems error. Each contravention faces a potential penalty of up to A$18 million.

AUSTRAC's action follows an investigation into CBA’s compliance, particularly regarding its use of intelligent deposit machines.

Chapman said ASB operates a different type of intelligent deposit machine to CBA and uses different software.

"We do take the reporting of financial crime really seriously. And so certainly over the past few days we've looked again at our reporting processes, and I imagine every bank in Australia and New Zealand has done that. We don't operate the same type of intelligent deposit machines as CBA do or the same software. So we've found no evidence of any problems with our reporting to the Police Financial Intelligence Unit."

"And we regularly do meet with the Police Financial Intelligence Unit and they provide us with quarterly reports. And what they're saying to us is that the quality of our reporting of suspicious transactions to them, and the quantity of our reporting, doesn't suggest any problems. When they look at the size of our business, the quality and quantity they're saying is proportionate to the size of our business, so that gives me comfort," said Chapman.

Staying mum on pay cut

One of the CBA board's responses to the AUSTRAC court case has been to "reduce to zero" annual short-term variable remuneration, incentives and bonuses, for CEO Ian Narev and his group executives. Chapman is one of the group executives. However she won't be drawn on her pay.

"CBA isn't required to disclose my remuneration. Under the Australian corporations law I am not considered a key management personnel at CBA. And here [New Zealand] it's not required to be disclosed...So I'm not going to talk about my rem[uneration]," Chapman said.

She was speaking after ASB released its annual financial results, with profit topping $1 billion for the first time.

Smart ATMs 'an easy method to place the proceeds of crime into the banking system'

In April the Reserve Bank released an Anti-Money Laundering and Countering Financing of Terrorism Sector Risk Assessment for banks, non-bank deposit takers and life insurers, which it oversees for compliance with New Zealand's Anti-Money Laundering and Countering the Financing of Terrorism Act. This highlighted concerns around deposit quick drop facilities including smart ATMs.

"The ease of use and anonymity afforded by these services are considered to present a high level of ML/TF [money laundering/terrorist financing] risk for retail banks. This type of service has been highlighted both domestically and internationally as an area of concern. While the Reserve Bank recognises that this service provides greater customer convenience and quicker deposit of funds, the deposit of cash by unidentified persons remains a key vulnerability of this service," the Reserve Bank said.

"Drop boxes/Smart ATMs provide a high degree of anonymity and an easy method to place the proceeds of crime into the banking system."

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13 Comments

I had perhaps naively assumed that the standard-issue smart deposit capable ATM was gonna take yer photo, yer fingerprints, and yer munny, all at once......

They do! And onforward the funds to a cleanup account.Just like in this SpecSavers ad.....
https://www.youtube.com/watch?v=6OcscgDrMmk

So let me get this straight. The major banks have gone and closed the accounts of numerous money remitters and brokers over the past couple of years under the guise of AML risk, when in fact they themselves are running systems that "provide a high degree of anonymity and an easy method to place the proceeds of crime into the banking system."

But money remitters and brokers are competition....

The main issue that RBNZ hasn't picked up on is the option for soap powder and the rinse cycle button on those deposit ATMs.

Does ASB Bank record any details of deposits? You just walk up and put the special sealed bag filled with money into the box from where it's processed, no questions asked or ID required. They don't appear to have any safeguards in place to my untrained eye.

I smell a large fine coming. They can use their recent profit to pay for it. Also heard that a chunk of snr managers have their bonuses declined on the back of this.

Any regulation, once the rules are understood can easily be circumvented. Go onto the FMA, or DIA website or just Google the criteria for AML. The cost of administering AML (which is passed on to the end user) is enormous. The prosecutions are extremely low. And I suspect the cost benefit woeful. Perhaps if the police, and regulators followed the money trail and got back to good old fashioned policing then they might make some headway.

Dealing in cash is not a crime.
And is actually preferable to having some sticky beak banker nosing through your account details.

says every money launderer, tax evader, gang leader ever.

I heard a story some time ago and no idea if its just urban myth or not. But in the early days of atms which coincided with high deposit interest rates, the scam was the following. Friday after business hours deposit $1M at the atm, put the machine slip in the empty envelope and feed it to the machine. Monday when the machine is cleared get the phone call from the bank, whats going on? Oh sorry i have no idea, my mistake. Bank reverses $1M. Bank software still not up to speed though with this new method of depositing and falls to reverse interest accrued at 10% on $1M for 2-3 days. Good story regardless.

$1M cheque ? Or Cash ?

Good story yes, but fraud nevertheless