National Bank says it is investigating “issues” relating to its compliance with anti-money laundering and counter-terrorist financing laws, pointing to shortcomings in some transaction monitoring.
In its annual report, published on Tuesday, NAB included a contingent liability for potential costs from a project that has been in train since July last year to “strengthen” its program for complying with anti-money laundering and counter-terrorist financing laws.
These laws are enforced by Austrac, the financial intelligence regulator, which is alleging a mass breach by the Commonwealth Bank.
NAB’s document only gave limited detail, but revealed there had been shortcomings in its “know your customer” systems, which are used by banks to check customers’ identities. It also pointed to “issues” in its transaction monitoring in some parts of the bank.
“The group is currently investigating and remediating a number of identified issues, including certain weaknesses with the implementation of ‘Know Your Customer’ requirements, and systems and process issues that impacted transaction monitoring and reporting for some specific areas,” the report said.
“It is possible that, as the work progresses, further issues may be identified and additional strengthening may be required.”
The banking industry has this year been rocked by the money laundering compliance scandal at Commonwealth Bank of , after regulator Austrac alleged in August that the bank had failed to properly report more than 53,000 large cash transactions through its ATMs between 2012 and 2015.
Austrac has publicly said NAB, ANZ Bank and Westpac have not had the same problems as CBA in their intelligent deposit machines, which accept large cash deposits.
NAB bank did not put a dollar figure on the size of the potential costs from these “weaknessses.”
“The outcomes of the investigation and remediation processes for specific issues identified to date, and for any issues identified in the future, are uncertain,” it said.
NAB said its upgrading project had involved a “significant investment in systems” and it aimed to deal with “specific compliance issues and weaknesses if they are identified.” Any major problems would be reported to Austrac and foreign regulators, it said.
NAB’s chief risk officer, David Gall, said in a statement the bank took its anti-money laundering obligations “extremely seriously.”
“We have anti-money laundering policies and processes in place, and if we find weaknesses in these, we work hard to strengthen and fix them immediately,” he said.
“As part of our strong and co-operative working relationship with AUSTRAC, we regularly discuss how we can improve our processes to ensure people with bad intentions are prevented from committing crimes.
“In our annual reporting material, NAB has taken a transparent approach by disclosing our commitment to strengthening our processes and systems given the heightened market interest around these issues.”
Austrac has been approached for comment.