Money laundering claims spark class action against CBA

A class action has been filed against the Commonwealth Bank of Australia in the wake of Australia’s anti-money-laundering watchdog, AUSTRAC, seeking substantial civil penalties against the bank.

The lawsuit, led by Maurice Blackburn Lawyers and funded by IMF Bentha, claims that the bank’s leadership breached its continuous disclosure obligations and that CBA share prices dropped following AUSTRAC’s announcement.

The bank’s leadership was aware of breaches of money laundering rules in 2015 but did not make any announcement to the ASX until August this year, the statement of claim filed with the Federal Court says.

Andrew Watson, the national head of class actions at Maurice Blackburn, said the 4 August announcement by CBA of AUSTRAC’s court action sparked a drop in share price that was in the “top 1 per cent of price movements that CBA experienced in the past five years”.

CBA shares opened at $84.09 on 3 August; on 7 September CBA shares opened at $80.11.

The statement of claim names CBA CEO Ian Narev; former chief risk officer Alden Toevs; chief risk officer David Cohen; the bank’s current and former chairs, Catherine Livingstone and David Turner; and current and former non-executive directors.

“CBA intends to vigorously defend this claim,” the bank said in a statement.

AUSTRAC’s action against the bank centres on CBA’s Intelligent Deposit Machines (IDMs), which were rolled out in 2012. The bank has blamed a “coding error” for a failure to report to AUSTRAC suspicious transactions involving the IDMs.

AUSTRAC has accused the bank of the 53,700 breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

The government agency says that CBA failed to report suspicious matters either on time or at all involving transactions totalling over $77 million.