Regulatory Authorities Fines TD Bank, Adelaide Casino, and SBI over $500 Million For AML Failings

International financial watchdogs have imposed a fine of over $500 million on TD Bank, Adelaide Casino, and SBI for non-compliance with anti-money laundering regulations.

The federal court has imposed a fine of $67 million on the Adelaide casino over a money laundering probe brought on by the Australian Transaction Reports and Analysis Centre (AUSTRAC). The civil action against the casino found that it failed to meet Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations.

A representative from AUSTRAC said that “Australia’s free and open economy can be exploited by bad actors to launder illicit funds, and money laundering remains an intractable issue that comes with significant harm to the public. SkyCity admitted that its contraventions made it vulnerable to criminal exploitation and exposed the Australian community and financial system to money laundering and terrorism financing risk.”

In addition to this, the spokesperson also stated that the company failed to comply with due diligence measures, which has allowed high-risk entities to launder millions of dollars through the casino.

“In ways that made the source and ownership of the funds unclear,” AUSTRAC said.

“It failed to carry out required checks on 121 customers, including where SkyCity knew customers were the subject of law enforcement interest, or where there were indications that some posed a higher risk of money laundering.”

Peter Soros, acting chief executive of AUSTRAC, said like other financial businesses, casinos need to meet AML obligations seriously.

“Criminals will always seek to take advantage of the gambling sector to clean their dirty money,” Mr Soros said. “Today’s result shows AUSTRAC is prepared to take action when businesses, including casinos, fail to comply with the legislation. Businesses who ignore their obligations are affecting the Australian community by leaving the door open to criminal activity.”

Sotos LLP in the Ontario Superior Court of Justice alleges TD Bank for failing to adequately disclose its ineffectiveness in in-house AML Controls, resulting in a $450 million penalty. A proposed shareholder class action is underway against the alleged bank, its directors, and its officers. This further resulted in the dropping of its stock price.

“Despite knowing of the significant regulatory risks, TD exhibited systemic deficiencies in its AML controls since at least 2012. The seriousness of TD’s lax AML controls, particularly in its U.S. operations, were notorious within TD,” the suit alleged.

“These deficiencies had been, and throughout the class period continued to be, exploited by criminal organizations, including drug traffickers, to launder hundreds of millions of dollars and transfer the proceeds of crime across international borders using basic methods that should have been flagged by properly functioning AML controls,” the filing said.

On Friday, a local branch of the State Bank of India (SBI) was fined $970,000 by The Hong Kong Monetary Authority (HKMA) for failing to comply with AML and CFT regulations. The lawsuit followed the regulatory authorities’ investigation between April 2012 and November 2013 to identify whether the bank had compliant internal controls.

According to the investigation’s key findings, the SBI branch failed to carry out customer due diligence measures as obligated by the HKMA before making ties with 28 corporate clients. The bank also could not monitor customer activities as a whole, not establishing and maintaining procedures to determine customer risk and PEP status.

Siddhartha Sengupta, SBI’s head of international operations and managing director, said the bank was not involved in money laundering or suspicious transactions. Still, the regulatory actions were triggered due to gaps in in-house controls at the SBI’s branch.

“This was a case of internal control failures relating to AML/CFT systems. The HKMA takes such failures seriously and wants to send a clear message to the industry that all authorized institutions should have effective AML/CFT systems and controls in place to, among other things, detect and report suspicious transactions based on their knowledge of their customers,” Meena Datwani, director-general (enforcement) at the HKMA, said in the order.

“These are fundamental to combating money laundering and terrorist financing and thereby maintaining the integrity of the banking system and the reputation of Hong Kong as an international financial center. The HKMA will take appropriate enforcement action to deter any lapses in this regard,” she added.

“SBI UK has taken very positive and intensive remediation work to address the contraventions identified in the HKMA’s investigation and other weaknesses identified in the HKMA’s onsite examination,” said the order.

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