NAB investigated over financial crime breaches

  • By Elizabeth Fry

National Australia Bank is facing allegations of “potentially serious and ongoing non-compliance” with anti-money laundering laws, with Austrac launching a formal investigation into the lender. 

On Monday, NAB said has been informed by the financial crimes agency that it had identified serious concerns with NAB’s customer identification procedures, ongoing customer due diligence, and compliance with anti-money laundering and counter-terrorism financing laws. 

In a letter dated 4 June 2021, NAB was advised that these concerns have been referred to the regulator’s enforcement team, which has initiated a formal investigation. 

Austrac’s referral to its enforcement team follows regular engagement by NAB over a long period, including in the bank’s first half results, both to report issues and keep the regulator informed of progress in strengthening the bank’s anti-money laundering program, Austrac said.  

In the letter, the financial crimes regulator said it has not made any decision about whether enforcement action would be taken, adding that at this stage, it is not considering civil penalty proceedings and that this decision is “reflective of the work undertaken” by NAB.  

Austrac said it has a wide range of enforcement options available to it, including civil penalty orders, enforceable undertakings, infringement notices, and remedial directions,” the regulator said. 

A key priority 

NAB chief executive Ross McEwan said the lender would cooperate with Austrac's investigations. 

“NAB takes its financial crime obligations seriously. We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do,” McEwan said. 

“NAB has an important role in monitoring and reporting suspicious activity and keeping Australia’s financial system, our bank, and our customers safe. 

“It is a key priority for everyone at NAB to uplift our financial crime capabilities, minimise risk to customers and the bank, and improve operational performance. That’s why we are so focused on getting the basics right every time to protect our customers and our bank.” 

NAB said since 2017, it had invested about $800 million as part of a multi-year program to uplift its financial crime and fraud controls and has more than 1200 people dedicated to managing financial crime risks.  

The move by Austrac comes nine months after Westpac was ordered to pay a $1.3 billion fine for breaches of anti-money laundering rules. 

Moody’s said this development is credit negative for NAB as it could potentially lead to an enforcement action and/or financial penalties.