AUSTRAC Hits Military Bank with Enforcement Action to Ensure AML Compliance

The financial regulator in Australia has hit the Australian Military Bank with implementation action to ensure that the bank is properly regulated with anti-money laundering compliance and to stop the bank from being exploited by the criminals. 

AUSTRAC, the major regulatory body in Australia has issued Australian banks with around 56,000 customers including major military clientele like veterans, serving defence force, and their families with amendatory action. The remedial direction is a part of the enforcement actions plan of AUSTRAC. 

The remedial direction requires the Australian Military Bank (AMB) to appoint external auditors to make sure that the concerns raised by the financial regulators are properly addressed and to ensure a flawless system and controls. However, AMB has not been issued any type of penalties. 

The financial watchdogs require the bank to revisit its AML/CFT controls and address the deficiencies within its KYC regime and transaction reporting. The regulators also required the AMB to conduct extensive staff training regarding their handling of the PEPs (Politically Exposed Persons). 

The CEO of AUSTRAC, Nicole Rose, said that it is significant for the AMB to address the threats that the businesses face by the criminals. The CEO also warned that those failing to comply with the required obligations will have to face penalties issued by the AUSTRAC. 

“The Australian Military Bank has demonstrated a commitment to uplifting its AML/CTF controls. It is encouraging that AMB has already started implementing a remediation action plan and this remedial direction will help to ensure AMB meets its compliance and reporting obligations,” Ms Rose said. “Where these obligations are not met, AUSTRAC will not hesitate to draw on our range of regulatory tools and enforcement powers to maintain public confidence in Australia’s financial system and prevent non-compliance.”

A deadline of 10 weeks has been given to AMB to appoint an auditor and complete an assessment for money laundering. The bank must design, document and enforce systems and must move to meet the requirements regarding knowing your customer, enhanced due diligence, and monitoring of the transactions. 

The awareness training of the staff provided by AMB must highlight the managing of the politically exposed persons and beneficial ownership of the companies. It must also focus on its obligations regarding the reporting of suspicious transactions matter, transfer of international funds instructions, and threshold transactions.