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TOPIC: Jennie Paluka says "report McGarvie to IBAC"

CBA Narev Moneylaundering Scandal 4 months 2 weeks ago #3835

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Aug 4 2017 at 11:00 PM
Updated Aug 4 2017 at 11:00 PM

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Commonwealth Bank, Ian Narev slammed over money laundering allegations

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David Rowe

James Eyers
James Frost
Vesna Poljak
Simon Evans

Eleven people are in jail and dozens more have been arrested here and overseas for using the Commonwealth Bank of Australia's lax funds transfer systems for money laundering, drug dealing or being in receipt of the proceeds of crime.

The extraordinary scale and systemic nature of the problem at Australia's largest bank has been laid bare in a statement of claim that runs to 583 pages and details thousands of transactions that were either ignored by the bank or reported too late to stop funds being transferred overseas.

Commonwealth Bank shares plunged 3.8 per cent on Friday as the market digested the magnitude of the allegations, shaving close to $5 billion from the bank's market capitalisation.

Fund managers and industry observers questioned whether the reporting failures flowed from a culture lacking accountability and if CEO Ian Narev would survive the scandal.
After the APRA inquiry was announced, the three credit rating agencies which assign ratings to the bank's senior bonds ...
After the APRA inquiry was announced, the three credit rating agencies which assign ratings to the bank's senior bonds warned of negative credit implications. David Rowe

Financial intelligence regulator AUSTRAC alleges CBA breached the Anti-Money Laundering and Terrorism Funding Act of 2006 more than 50,000 times by delaying or failing to report suspiciously large cash deposits in its network of more than 500 'intelligent deposit machines', which can accept deposits of up to $20,000 per transaction, higher than the level of rival banks.
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The catastrophic reporting failure of its transaction monitoring program has been sheeted back to a software problem, described by CBA as a 'systems error', which was identified on June 16, 2014. But AUSTRAC says CBA did not resolve the systems error on all active affected accounts until November 30 of 2015, and it wasn't resolved on all inactive affected accounts until September 27, 2016.

Catherine Allfrey, from WaveStone Capital, said she did not believe the bank would deliberately enable any form of criminality, but if a systemic refusal to obey the rules could be proved, "that is a management and cultural issue and the board has to act".

Peter Morgan, a private investor and former head of equities at Perpetual and 452, said: "There's no accountability. It's Australia's biggest company, the largest holding in every equity fund in Australia. The arrogance in the banking sector has been building for a number of years and it's just got to stop. I hope over the weekend the board and the management are considering their positions."

Mr Narev said staff had every right to be disappointed by the accusations being levelled at the bank by AUSTRAC, and sought to reassure them in an email sent late on Thursday night. He told them the bank will be able to say more once its defence to the allegations if filed.
CBA chief executive Ian Narev, whose bank stands accused of breaching the Anti-Money Laundering and Terrorism Funding ...
CBA chief executive Ian Narev, whose bank stands accused of breaching the Anti-Money Laundering and Terrorism Funding Act 55,700 times. Alex Ellinghausen

"Many of you who know how much attention we pay to these obligations have asked me how the alleged breaches could have occurred....I also know how disappointing it is for all of you when issues of this nature cast CBA in a poor light. It overshadows the outstanding work all of you are doing each day for people, business and communities. We will do our very best to work through this expediently, and in accordance with our values," Mr Narev said.

A rival bank CEO said the bombshell reflected poorly on banks as a whole.

ANZ CEO Shayne Elliott told ANZ staff in Adelaide that all banks were tarnished by claims that a bank looked the other way as money was anonymously funnelled to a series of CBA accounts using the machines' blindspots.

"We're an industry, and I don't take any pleasure in seeing one of our peers, you know, have incidents like that," Mr Elliott told reporters in Adelaide after an ANZ customer lunch.
ANZ CEO Shayne Elliott said all banks were tarnished by the claims.
ANZ CEO Shayne Elliott said all banks were tarnished by the claims. Alex Ellinghausen

"I don't know the details, I've only seen what I've read in the newspapers, so you know it was a surprise to see that."

CBA's three big rivals sought to distance themselves from the scandal on Friday saying their ATMs were fully compliant. ANZ and NAB both said their machines only accepted deposits of $5000 at a time or one quarter the amount of Commonwealth Bank's.

CBA's share price held up in early trading, falling broadly in line with the market, before capitulating as the overwhelmingly negative commentary from analysts and experts poured in.

Credit strategists at Deutsche Bank told clients they were shorting CBA's credit default swaps reflecting both a recent rally but also "uncertainty related to the allegations".
Banks are up against digital disrupters, a growing trust gap and a push towards bank account portability.
Banks are up against digital disrupters, a growing trust gap and a push towards bank account portability. Wayne Taylor

Mark Nathan, a fund manager from Arnhem Investment Management, said the market appeared to have overreacted by selling the shares down by $5 billion, far larger than any likely fine.

Although there was no evidence that the bank was benefiting financially Mr Nathan said there should be consequences for management.

"I have long been an advocate bonuses should reflect the performance of the management and this would have to be something at least factored into the equation," Mr Nathan said.

Andrew Martin, from Alphinity Investment Management agreed, saying" "I suspect shareholders will require at the very least management to also suffer from a monetary perspective."

The international ratings agency S&P Global Ratings told global investors the issue may take some time to conclude. "As more information becomes available on this matter, we will assess whether it has any impact on CBA's credit profile due to any financial penalties, potential damage to the bank's reputation and franchise, or any indications of weaknesses in its governance and risk management framework," S&P said.

Before the stock price slumped on Friday, Goldman Sachs banking analyst Andrew Lyons said the stock was trading at a 16 per cent premium to peers, and if it were to move to a 5 year peer relative valuation low "due to a potential hit to its reputation", the stock price could fall by 9 per cent.

Writing in AFR Weekend, financial system inquiry member Kevin Davis said the odds on a Royal Commission or further Parliamentary Inquiry into banking "have just shortened significantly".

However, a spokesperson for the Shadow Minister for Financial Services Katy Gallagher, said "we will await the conclusion of [the AUSTRAC] process before commenting any further on this specific case."

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AMP Directors resign 4 months 2 weeks ago #3838

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Three AMP directors have resigned from the company following an outcry from investors ahead of the company's annual meeting this week.

The resignations include two of the AMP directors who were up for re-election - Holly Kramer and Vanessa Wallace. They will step down ahead of the meeting on Thursday.
Holly Kramer (pictured) and Vanessa Wallace, who were up for re-election, will stand down ahead of the meeting.

Holly Kramer (pictured) and Vanessa Wallace, who were up for re-election, will stand down ahead of the meeting.
Photo: Fiona Morris

A third director who was not up for re-election, Patty Akopiantz, will also step down but will serve until the end of the year.

The resignations come after a horror few weeks for the wealth manager at the royal commission, where it was revealed it had misled the corporate regulator and changed an independent report into the company's fees-for-no-service scandal.

Another AMP director due to stand for re-election, Andrew Harmos, will still run for a spot on the AMP board.

AMP interim executive chairman Mike Wilkins said: "Our shareholders are demanding board accountability and need to know that meaningful change is underway."
AMP named director Mike Wilkins as interim executive chairman last week.

AMP named director Mike Wilkins as interim executive chairman last week.
Photo: Fairfax Media

Mr Wilkins had been lobbying major shareholder groups to vote in favour of retaining the three directors up for re-election.

More to come

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Treasury: Break up the banks 4 months 2 weeks ago #3840

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Banking royal commission: Pressure to break up banks as Treasury, ASIC lash model
Banking royal commission chief Kenneth Hayne. Picture: Eddie Jim
Banking royal commission chief Kenneth Hayne. Picture: Eddie Jim

The Australian
12:00AM May 11, 2018
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Michael Roddan

The corporate watchdog and Treasury have laid out stinging criticisms of vertically integrated financial players in responses to the royal commission that raise the pressure to break up Australia’s largest banks.

Treasury told the royal commission into financial services that the second round of hearings had made it “clear” that poor culture and misaligned incentives were the “key cause” of misconduct, and said there were many benefits that could come from the major banks splitting up their financial advice and wealth management arms.

In a cache of submissions to commissioner Kenneth Hayne, and released last night, banks and regulators had been asked to justify the entangled cross-ownership of businesses and address issues such as conflicted remuneration for financial advisers, the shunting of customers into in-house ­products and the breakdown in compliance between parent companies and rogue financial sub­sidiaries.

“There should be no trade-off between long-term profitability and having a good culture and providing services of value to customers, where there is effective competition,” Treasury said.

It said the commission should investigate what the benefits were from breaking up the banks measured against a “status quo” model where the banks get to keep their wealth management arms with tougher rules to mitigate conflicts of interests.

Both ANZ and National Australia Bank are in the process of ­exiting their respective financial advice businesses and have already offloaded their life insurance operations.

Common­wealth Bank is exploring options to offload its Colonial funds management business and has also sold its life insurance business. However, Westpac chief executive Brian Hartzer this week said his bank was committed to keeping its BT Financial Group division.

“There are challenges in financial planning generally. We think those issues have been dealt with,” Mr Hartzer said. “We can do more on the compliance side.”

He said the bank was “constantly reviewing” its operations and was fixing issues where it found them.

In its submission, Treasury said rules requiring banks to do better at disclosing subsidiaries they owned to customers was likely to fall short of what was needed to clean up the industry. “While disclosure is an important regulatory tool, Treasury is not suggesting that the implementation of this reform is sufficient, in and of itself, to address conflicts of interests within integrated institutions,” it said.

Treasury also said that if banks were broken up, and the price of ­financial advice increased because the conglomerates could no longer cross-subsidise their businesses, consumers would be able to better gauge whether they actually needed advice.

“Conflicts of interest are also inherent in such business models and the true prices of products and services lack transparency,” Treasury said.

“By removing any cross-subsidisation of the advice business, through separation, the real cost of advice to a customer is likely to become more obvious and upfront.

“Consumers choosing not to seek advice, following a sensible assessment of the likely value of that advice, would not be a negative outcome.”

The Australian Securities & Investments Commission stopped short of calling for a break-up, but questioned whether benefits were being passed on to customers.

“While some customers may derive benefit from dealing with a vertically integrated financial institution, it may be important to assess whether these benefits are being realised in any given case,” ASIC said in its submission.

The watchdog questioned whether lower prices were actually passed on to customers, whether consumers were able to make informed choices, and whether companies acted in a way that “vindicated” the trust place in them.

However, ASIC noted vertically integrated businesses could create economies of scale, convenience and greater safety for consumers in the event things go wrong.

CBA said in its response “actual or perceived conflicts of interest can exist” in vertically integrated business, but that the business model “can create a beneficial connection between the customer and product”.

The bank said appropriate safeguards must be in place.

CBA said if large vertically integrated businesses were broken up, consumers would lose out on economies of scale, a large array of products and greater technological innovation.

National Australia Bank’s lawyers said financial advisers “can effectively manage the conflicts of interest associated with providing advice” and that it was not necessary to “enforce the separation of products and advice” as long as conflicts of interest were appropriately managed.

NAB said there was evidence that the bank already had the “tools” in place to manage conflicts, such as its research arm that recommends products at arm’s length from the bank.

Wealth manager AMP said vertically integrated firms offered cheaper products and greater convenience. It said customers “may also value the perceived safety of dealing with a large institution” that could both deliver the services and compensate them appropriately if required. “The key issue is not vertical integration per se, but that all conflicts of interests (conflicts exist in all models, whether vertically integrated or not) are appropriately managed.”

ANZ, which has sold its pensions and investments and life insurance businesses, said vertically integrated companies could still serve the interest of clients if conflicts were managed.

Westpac said vertically integrated groups were in the interests of clients “provided appropriate protections are maintained”.
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lscb 'spying' on indpendent politicians? 4 months 2 weeks ago #3841

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Jennie Paluka says "report McGarvie to IBAC" 4 months 2 weeks ago #3842

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CBA, Westpac, ANZ and NAB are in for 'tougher times': UBS report
By business reporter David Chau
Updated about an hour ago
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Logos of the big four banks

The big four banks have been downgraded with "sell" and "neutral" ratings by UBS. ABC News: Giulio Saggin, file photo

"Tougher times" are ahead for Australia's banking sector, according to UBS, with the spectre of the banking royal commission hanging over their shoulders, and their earnings likely to drop in the next few years.

The global investment bank described the first half results of the big four banks as "disappointing" in its report released on Friday.

It also remains "very cautious" in light of rising funding costs, and believes "the risk of a credit crunch is material".
Downgraded banks

Earnings per share (EPS) fell 3.7 per cent across the sector, dragged down by NAB's restructuring costs, in the order of $755 million, as it prepares to lay off 6,000 staff over three years due to technological disruption.
Banks take money for nothing

Banks raked in hundreds of millions of dollars in fees for services they didn't provide. The penalty is they have to pay it back.

Aside from a sharp slowdown in credit growth, UBS also said the banking sector faced rising costs of 6.6 per cent in the first half — once again pointing the finger at NAB's restructuring.

The higher costs were also due to CBA setting aside $575 million for compliance and potential penalties arising out of its alleged breach of anti-money laundering (AML) laws.

That's in addition to the banks' net interest margins (NIM) —or the difference between the bank's borrowing costs and the rate it lends — being pulled down from tighter lending standards, as more customers migrate from interest-only to principle-and-interest loans.

"Across the sector we downgraded forecasts [for EPS] by 1, 4, and 6 per cent over the next three years," wrote Jonathan Mott and Rachel Bentvelzen, the authors of the UBS report.

"Risks to our forecasts remain skewed to the downside especially as credit conditions continue to tighten and the federal election approaches (likely April/May 2019)."

Despite downgrading every bank, UBS noted there were some positives in the first-half results. Namely, banking sector revenue growing by 1.7 per cent, and NIM rising by 2 basis points (+0.02pc).
To sell, or not to sell

In the year to date, there have been steep losses in the share market for CBA (-11.8pc), Westpac (-4.8pc), ANZ (-1.3pc) and NAB (-3.7pc).

UBS slapped Westpac and ANZ with "sell" ratings, while CBA and ANZ were hit with "neutral" ratings.

It noted Westpac's first-half results benefited from its total revenue per share gaining 2.5 per cent, driven by a mortgage repricing in June last year, which boosted NIM by 7 basis points (+0.07pc).
New home buyers' credit crunch

Home buyers could see their borrowing capacity cut by as much as 40pc due to reforms likely to be driven by the Hayne Royal Commission

But UBS had doubts about the quality of Westpac's assets, first raised a fortnight ago.

This was in light of Westpac's poor home lending practices, in APRA's Targeted Review, revealed publicly at the royal commission.

NAB's first-half results were "subdued" on the other hand, with revenue per share down 0.3 per cent, and loan growth at just 1 per cent.

However, NAB's earnings per share plunged by a sharp 18.5 per cent, given its substantial restructuring costs.

"Messy" was how ANZ's first-half results were described — though its net profit surged 14 per cent to $3.3 billion.

"While ANZ's costs fell on an absolute basis, there were no efficiency gains on a per share basis."

UBS found CBA's first-half result to be "reasonable", with its net profit beating expectations, and revenue per share gaining 4.6 per cent.

But the revenue growth was eroded by CBA's $200 million provision for the royal commission legal costs, and $375 million for potential AML fines.

Of course, there is no guarantee that AUSTRAC will settle its case against the nation's biggest bank for that amount, or whether there will indeed be a settlement.
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Jennie Paluka says "report McGarvie to IBAC" 4 months 2 weeks ago #3843

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Money & Markets
The Commonwealth Bank money laundering scandal has gone international
Chris Pash
Sep 1, 2017, 12:03 PM


Photo: Torsten Blackwood/AFP/Getty Images

The Commonwealth Bank failed to monitor billions of dollars of transactions in its offshore businesses in the US, Asia and Europe, according to a confidential internal report.

Sky News Business, which obtained the document, says the review showed “non-existent or minimal transaction” monitoring for almost two thirds of the bank’s Institutional Banking and Markets division.

The Commonwealth Bank of Australia is in the Federal Court, accused of breaching the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act over combined cash deposits of $624.7 million.

The civil proceedings follow an investigation by Australia’s financial intelligence and regulatory agency, AUSTRAC, into the use of intelligent deposit machines which, it is claimed, became the outlet of choice for criminal syndicates to shift offshore cash from drug deals.

Corporate regulator ASIC (Australian Securities and Investments Commission) has has also confirmed it is investigating the bank over its conduct in the money laundering scandal.

And the banking regulator, APRA (Australian Prudential Regulation Authority) is investigating governance, culture and accountability at Australia’s biggest company.

According to a report in The Australian newspaper, the internal CBA report found that five of the bank’s businesses had no transaction monitoring in Australia, New York, Singapore, Hong Kong and London.

The newspaper said: “The report was presented by Philippa Watson, the CBA’s executive general manager in charge of security and advisory, Matt Keaney, the general manager of financial crime services, and Matt Kind, group manager of security.”

On the latest report, in a statement today the Commonwealth says the review was a working document of the Institutional Banking and Markets division, proposing technology enhancements, including the automation of tasks done manually.

More than $230 million has been spent so far to strengthen policies and processes related to financial crimes compliance.

“The program (Program of Action) includes investment in systems to enhance transaction monitoring currently performed in Australia and offshore jurisdictions,” the bank said.

“The Commonwealth Bank maintains proactive relationships with all relevant global regulators on these and other matters.”

A committee of the board of directors was set up earlier this month to oversee the bank’s response to AUSTRAC’s statement of claim. The committee members: Mary Padbury, bank chair Catherine Livingstone, Brian Long and Shirish Apte.
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