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TOPIC: US Feds and CBA Terror Finance Probes

US Feds and CBA Terror Finance Probes 1 year 1 week ago #3446

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"They were terrified" says Dennis Sgargetta & Associates to the SEC, Victorian Ombudsman and Cameron Sinclair at

The Age

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Eleven already jailed over CBA money laundering syndicates
Michael Evans, Clancy Yeates

Published: August 5 2017 - 12:15AM

Two men recently jailed over a $2 million money laundering plot using a "cuckoo smurfing" scam are among 11 people already jailed as part of criminal syndicates caught exploiting Commonwealth Bank accounts to wash money.

Arlsan Shaffi and Salman Khan were arrested in May 2015 after laundering money using more than 100 CBA accounts in a complicated money-shifting scam.

The pair was jailed for a scheme involving the transfer of money between associates in separate countries in a manner that avoids the need for these parties to transfer money across borders and raise suspicions.

The pair laundered $1.78 million in cash deposits through 101 CBA bank accounts in 255 separate transactions. Authorities are now investigating the pair over at least another $3 million for offences under money laundering and counter-terrorism financing laws.

The revelations come as pressure builds on the bank to respond to allegations ahead of next week's full-year results, which are expected to show another record profit of nearly $10 billion. Austrac has accused the bank of breaching anti-money laundering and anti-terrorism financing laws in a statement of claim in court.

The nearly 600 pages of allegations lodged in the Federal Court detail examples of organised crime figures laundering money through CBA's high-tech ATMs while the bank either failed to detect the transactions or failed to tell authorities.

Austrac alleges CBA failed to detect, review and report years of suspicious transactions worth millions of dollars involved in money laundering by drug syndicates.

At dozens of ATMs across Sydney and Melbourne, from Bondi Junction through Haymarket to Burwood, and in Melbourne from Chadstone to Springvale, Austrac alleges foreign nationals were part of four criminal syndicates that exploited a loophole in the bank's technology that didn't cap the number of cash deposits to its new ATMs.

Criminal syndicates would then transfer money offshore.

Members of four syndicates have already been jailed, including Yuen Hong Fung (6 years) and Yeuk Tung Kong (7.5 years). Shaffi was sentenced to five years' jail and Khan three years.

Austrac alleges that in one case, after the Australian Federal Police (AFP) informed CBA of laundering allegations, the bank did not act to manage the money-laundering risk.

Among other allegations, Austrac details:

CBA never assessed the money laundering and terrorism-financing risks it faced from its new ATMs prior to their launch in May 2012 and at no time prior to July 2015 did it take any steps to assess their risk;
Nearly $9 billion in cash was deposited through CBA's new ATMs before it conducted any assessment of the money laundering and terrorism-financing risks associated with the machines.

While banks are required to tell authorities within three days about suspicious transactions, transactions above a certain limit and concerns about fake identities, CBA sometimes took months to report concerns and in other cases never reported concerns, it's alleged.

In one instance, the AFP told CBA it suspected a customer believed to have laundered money had used fake identities.

The group head of anti-money laundering at the bank emailed to say: "Given the nature of the matter, I would have thought SMRs [suspicious matter report] are appropriate on all the clients?"

Yet according to the statement of claim, CBA "at no time" lodged an SMR with Austrac.

In another example, there is a two-week gap between when concerns about "blatant intense structuring activity" were raised within the bank on June 13, 2015, and when the customer's account was closed.

"It was not until 1 July 2015 that CommBank put a stop on this account at the request of the AFP," court documents say.

In court documents, CBA blamed "systems error" for failing to comply with transaction monitoring.

The bank's chief executive, Ian Narev, who will present the bank's results next week, wrote to staff on Friday, saying the bank would lodge a defence to the claims.

It came as CBA's share price tumbled 3.9 per cent, as analysts predicted a royal commission into the financial sector was now more likely.

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State of California to sue CBA? 11 months 3 weeks ago #3452

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Big US funds could join class action against CBA
Outgoing Commonwealth Bank chief executive Ian Narev.
Outgoing Commonwealth Bank chief executive Ian Narev.

Michael Roddan,Ben Butler
The Australian

Michael Roddan
Ben Butler
Business reporter

Some of the biggest US investors are expected to pile into a class action against Commonwealth Bank, which was sued in the Federal Court yesterday over claims it misled shareholders about its alleged failure to comply with anti-money laundering laws more than 53,000 times.

The class action suit against CBA — potentially Australia’s largest ever, with damages likely to exceed $200 million — accuses the bank of failing to keep shareholders up to date while making “misleading and deceptive” statements about its compliance with anti-money laundering laws.

“CBA intends to vigorously defend this claim,” the bank said.

The filing of the class action by law firm Maurice Blackburn represents another battle for the besieged lender, which is yet to file a defence in the Federal Court to a suit brought in August by anti-money laundering agency Austrac, which alleged more than 53,000 breaches of anti-money laundering and counter-terrorism laws.

“There will almost certainly be US institutional participation in this case,” Maurice Blackburn head of class actions Andrew Watson said.

Counting only stock held by its top 20 shareholders, more than 10 per cent of CBA’s equity is held by US investors. Those US shareholders include CBA’s two biggest stockholders, New York-based investment giant BlackRock, which holds almost 5 per cent, and Pennsylvania’s Vanguard Group, which holds more than 3 per cent.

Other US shareholders include Fidelity International, the State of California and education retirement group TIAA-CHEF.

CBA told US investors in two disclosure documents that it was aware of the risks relating to compliance with the law, and was vulnerable to financial loss and a tarnished reputation if it breached the law.

“Anti-money laundering and counter-terrorism financing had been the subject of increasing regulatory change and enforcement in recent years,” and noncompliance was a significant risk for shareholders, CBA told US investors in 2015 and 2016.

Mr Watson declined to speculate as to whether the US Securities & Exchange Commission would be involved in the case.

“I can’t speak for the SEC,” he said. “We do know that one of the many things that fell out of the announcements which were made on the third of August was that the CBA is now the subject of the attention of overseas regulators. But whether anything comes of that is obviously not something I’m in a position to speculate on.”

The claim period was extended back by one month to ensure it captured a rights issue in August 2015 worth $5 billion. It is alleged the bank was aware it had breached anti-money laundering legislation but failed to make pros­pective investors aware of the failure.

CBA is also being investigated by the Australian Securities & Investments Commission over its continuous disclosure compliance, while prudential regulator APRA has launched a six-month investigation into the lender’s culture and governance.

In addition, CBA is in talks with fin­ancial regulators around the world, including in the US and Hong Kong, and the prospect that its institutional banking arm may have not been compliant with transaction monitoring laws in America, Europe and Asia could threaten billions of dollars in business for the bank.

Mr Watson and lead plaintiff William Phillips, a 63-year-old retired coconut farmer, faced a press conference yesterday after Maurice Blackburn filed the lawsuit, which alleges executives including outgoing chief executive Ian Narev knew about the alleged money-laundering scandal but failed to tell the market about it.

Mr Phillips said he had recently dumped $250,000 worth of CBA shares and bought ANZ instead. Shareholders had been treated “poorly, really poorly”, he said. “We have the right to full disclosure and we didn’t get it.”

CBA shares plummeted 13 per cent between August 3, when Austrac filed its claims, and September 7, according to the claim, wiping more than $10bn from the bank’s market value.

Maurice Blackburn alleges the bank did not make any statements to correct, qualify or contradict its anti-money laundering and counter-terrorism financing compliance statement, or other compliance statements, which were sent out to shareholders and potential investors.

The law firm said CBA “became obliged immediately to tell the ASX” of the late transaction reports and other alleged breaches at the start of July 2015, in line with rules requiring continuous disclosure of material information. Instead, shareholders discovered the alleged breaches only after Austrac filed its case more than two years later.

Mr Narev, former chief risk officers Alden Toevs and David Cohen, who was also the bank’s general counsel, along with chairman Catherine Livingstone and former chair David Turner, are named as key executives who ought to have known about the bank’s alleged breaches of the law, and to have known the bank was “exposed to enforcement action” that “might result in CBA being ordered to pay a substantial civil penalty”.

The claim also names 10 current and former non-executive board directors, including the soon-to-be retiring Harrison Young, Launa Inman and Andrew Mohl, as key figures who also ought to have known of the Austrac investigation. Ms Livingstone has maintained that, while the board knew about problems with its intelligent ATMs in 2015, the first it knew about Austrac’s legal action was when the agency filed its case in August."
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