Financial Crimes Agency Investigates National Australia Bank

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National Australia Bank Ltd. is being investigated by the government agency responsible for financial crime for what it said were serious concerns over the lender’s compliance with anti-money laundering and counter-terrorism laws.

Austrac, as the financial crimes regulator is known, wrote a letter Friday to National Australia saying a formal investigation is under way and that it has not made any decision at this stage about whether or not to take any action, according to a statement from the bank on Monday.

The watchdog said it’s not considering civil penalty proceedings at this stage. National Australia said it will continue to cooperate with the investigation.

“NAB takes its financial crime obligations seriously,” National Australia’s Chief Executive Officer Ross McEwan said in the statement. “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.”

The bank’s shares slipped 2.8% as of 11:50 a.m. in Sydney. National Australia may not be able to reach its cost target of A$7.7 billion ($5.9 billion) if it’s forced to pay fines, Bloomberg Intelligence analyst Matt Ingram said. The lender already boosted its compliance investment spending by 47% between 2017 and 2020, compared with a 0.2% increase in other costs, he said.

Austrac’s decision to start a formal enforcement investigation into National Australia’s operations follow its successful pursuit of rivals Westpac Banking Corp. and Commonwealth Bank of Australia on anti-money laundering and counter-terrorism law breaches. Westpac in September agreed to pay A$1.3 billion after it admitted to contravening the law on more than 23 million occasions. In 2018, Australia’s biggest bank, CBA, was fined A$700 million after the lender admitted it had breached the law on 53,750 occasions.

National Australia back in 2017 self-reported its own potential breaches of anti-money laundering regulations. Austrac’s letter to National Australia last week stated that the bank has invested significantly in programs to improve its financial crime risk capability, but despite this investment over an extended period, ongoing concerns remain.

©2021 Bloomberg L.P.

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