August 21, 2017
Sumeet Chatterjee, Swati Pandey-Reuters

HONG KONG/SYDNEY (Reuters) - A money laundering probe at Commonwealth Bank of Australia is the latest in a slew of scandals denting the reputation of Australian banks as simple, reliable lenders at the forefront in the battle against financial crime.

Australian banks have lagged their global peers in both their spending and their approach on anti-money laundering and know-your-customer systems as they pursued rapid growth in customer deposits, some banking officials and experts say.

"In the last few years, regulators and banks have been focused on changing the whole bank culture to get all levels of staff taking compliance seriously," said Philippa Allen, CEO of ComplianceAsia, which advices on compliance issues.

"That is not as widespread yet in Australia," she said. "Australian banks have not had the big fines imposed on them like their global peers have."

Know-your-customer (KYC) and anti-money laundering (AML) processes became a key focus globally after HSBC Group and Standard Chartered were hit with hefty fines in 2012.

Major international banks are now spending between $900 million and $1.3 billion a year on financial crime compliance, according to analysis by corporate governance recruitment firm Barclay Simpson.

HSBC spent $1.6 billion on regulatory and compliance programmes in the first half of 2017, up 12 percent from a year ago.

In comparison, CBA's spending on risk and compliance fell 7 percent to A$470 million ($371 million) in the year to June, according to the bank's annual report.

CBA said the drop was a result of the "timing and completion of key phases of risk and compliance projects" in the prior year including roll-out of refreshed teller machines.

The bank said it has hired more than 50 compliance professionals since 2015 and is strengthening its customer background check processes while upgrading technology used to monitor accounts and transactions for suspicious activity.

Rival National Australia Bank's spend on compliance and operational risk was nearly unchanged at A$167 million in its first half-year.

Reference:-
http://in.reuters.com/article/australia-cba-compliance-idINKCN1B10DJ

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