National Australia Bank Faces Money Laundering Probe

National Australia Bank (NAB) is facing a probe by the Australian financial crimes agency for some serious and ongoing breaches of anti-money laundering and counter-terrorism laws, the lender revealed on Monday.

The Australian Transaction Reports and Analysis Centre, better known as AUSTRAC, moved against the bank as a part of its wider campaign against organized crime and said that there were ‘areas of serious concern’ in the part of the lender’s business that needed to be investigated.

Additionally, the agency elaborated that potential lapses were in ‘customer identification procedures’, ‘ongoing customer due diligence’, and ‘compliance with Part A of a joint AML/CTF program’.

The investigation has been handed over to the agency’s enforcement team. However, no decision has been made for further enforcement actions or civil penalties on the lender.

“AUSTRAC’s concerns emanate from historical and contemporary compliance assessments,” the agency wrote in a letter sent to the lender last week. “In particular, the seriousness of self-disclosed matters presented to AUSTRAC over a prolonged period combined with the accompanying closure rates is concerning.”

Lenders Must Comply

The Australian agency had been vigilant towards the local financial institutions. It slapped fines of AUD 2 billion (around $1.5 billion) on Commonwealth Bank and Westpac Banking Corp over the last few years for breaches in anti-money laundering rules.

The impact of the latest investigation can be seen on the markets as the share prices of NAD, which is the country’s third-largest lender by market capitalization, fell by 3.16 percent on Monday’s trading hours.

“NAB takes its financial crime obligations seriously,” the bank’s Chief Executive, Ross McEwan, said in a statement released on Monday morning.

“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.”

Though the regulator is not considering financial penalties yet, the investigation can lead to higher compliance costs, according to JPMorgan analysts.

(Photo: NAB)

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