NAB is facing unwanted attention from financial crime regulator AUSTRAC over its compliance with anti-money laundering and counter-terrorism laws.
In a letter to the bank, the Australian Transaction Reports and Analysis Centre (AUSTRAC) said it had “identified serious concerns” with NAB’s compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act 2006 and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2007.
This has resulted in AUSTRAC starting a formal enforcement investigation.
AUSTRAC told the bank “there is potential serious and ongoing non-compliance” regarding customer identification procedures, ongoing customer due diligence and compliance with Part A of a joint AML/CTF Program.
At this stage, AUSTRAC said it is not considering civil penalty proceedings but noted it could take action in the form of civil penalty orders, enforceable undertakings, infringement notices and remedial directions.
The agency said “the seriousness of self-disclosed matters presented to AUSTRAC over a prolonged period combined with the accompanying closure rates is concerning.”
It pointed to five reporting entities – NAB, JBWere, Wealthhub Securities, Medfin Australia and AFSH Nominees – as part of the investigation.
While the agency said it recognises NAB has made significant efforts to increase its financial crime risk capabilities, it still holds doubts the bank has “the necessary systems and processes to comply with its AML/CTF obligations.”
AUSTRAC is no stranger to lawsuits over AML/CTF compliance and system failures.
NAB chief executive Ross McEwan said the bank took its compliance obligations seriously and would continue to cooperate with AUSTRAC.
“We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do,” McEwan said.
“NAB has an important role in monitoring and reporting suspicious activity and keeping Australia’s financial system, our bank and our customers safe.
“It is a key priority for everyone at NAB to uplift our financial crime capabilities, minimise risk to customers and the bank, and improve operational performance.
“That’s why we are so focused on getting the basics right every time to protect our customers and our bank.”
NAB said it had invested about $800 million since 2017 as part of a multi-year program to boost its financial crime and fraud controls and has more than 1200 people dedicated to managing financial crime risks.
NAB also stated that it had disclosed AML/CTF compliance issues since 2017, including in the bank’s 2021 half year financial report.