ASB Bank to Face Up to $6.7 Million Penalty Over Anti-Money Laundering Rule Failures

ASB Bank has acknowledged numerous violations of New Zealand’s anti-money laundering and anti-terrorism financing regulations and consented to a penalty of $ 6.7 million prescribed by the Reserve Bank, with the ultimate sentence amount to be determined by the High Court. 

The action was initiated when the Reserve Bank of New Zealand (RBNZ) discovered a number of compliance deficiencies in the systems used by ASB in the last five years. The RBNZ asserts that the bank did not adequately fulfil its core duties as stipulated by the Anti-Money laundering and Countering Financing of Terrorism Act, and as such, the bank had a lapse in terms of customer due diligence, monitoring transactions, and reporting suspicious activity to the relevant authorities. 

Angus McGregor, who played the role of an Assistant Governor of Financial Stability, emphasised compliance. He stated that since the AML/CFT regime is more than ten years old, then banks ought to have sound systems and resources to service their legal obligation. McGregor also included that any delays or gaps in surveillance may act as obstacles to detect and prevent criminal activity by law enforcement. 

Response and Improvements of ASB

ASB Chief Executive, Vittoria Shortt, recognised the weaknesses of the bank and apologised for the failures. According to her, ASB realised the role played by financial institutions in fighting financial crime and had taken steps in curbing the problems. According to Shortt, the backlog of monitoring alerts that the bank cleared was by the beginning of 2024 and claims that it continues to enhance its compliance potential by adding more staff and technology. 

Although ASB has been cooperative with the Reserve Bank and it even confessed to the liability, the regulators stressed that there is no indication of the bank having been directly involved in the money laundering or terrorism funding. 

Broader Regulatory Context

The case notes an increase in enforcing the financial sector in New Zealand. Cases Christchurch Casino and TSB Bank have been fined or sued in recent years over similar breaches of AML/CFT rules. 

The Department of Internal Affairs will be made the key overseer of AML/CFT compliance next year as a part of the current reforms, as the responsibility is currently divided between many agencies.

Also Read: FinCEN Imposes $100,000 Penalty on Former Credit Union BSA Officer