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Wall Street Journal: John Melican on Record Penalty for Compliance Failure

Wall Street Journal article, “Compliance Failure Leads to Record Aussie Penalty,” discusses the Commonwealth Bank of Australia’s failure to assess possible risks associated with its new product, a smart-deposit automated teller machine. The result of the organization’s failure is the largest Australian civil corporate penalty to date at $700 million (US $530 million).

Australian regulators determined that the bank’s failure to assess the ATMs for potential money-laundering and terrorism-financing, as well as the failure to submit reports of transactions, violates Australia’s anti-money-laundering and counter-terrorism-financing law. Exiger’s John Melican explains, “This is a failure of their new-product risk assessment process and their product integration reviews.”

The ATMs, first integrated in 2012, were not properly evaluated for associated risks until 5 years later in 2017. Assessments, first conducted in 2015 after evidence of money-laundering, failed to observe the bank’s compliance procedures. In spite of this failure, the fine was only imposed for criminal activity associated with the ATMs, which John explains, “That’s not something you always get in a regulatory action.”

Read the full article here.


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