The Reserve Bank of New Zealand - Te Pūtea Matua (RBNZ) has filed civil proceedings in the Wellington High Court against The Co-operative Bank Limited (The Co-operative Bank) in respect of three breaches of core requirements under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (Act), stemming from at least 2020.
The RBNZ's claim relates to the adequacy and effectiveness of The Co-operative Bank's AML/CFT programme, in particular its failures to:
- ensure all of its transaction monitoring rules were operating correctly;
- conduct adequate assurance activities to ensure the effectiveness of its account and transaction monitoring; and
- maintain adequate records relating to its transaction monitoring and assurance activities, as required by its AML/CFT programme.
As a result, The Co-operative Bank failed to identify higher risk transactions and customers, undertake timely enhanced due diligence, and maintain required records as required by the Act.
Acting Assistant Governor of Financial Stability Angus McGregor said: "This is the second AML/CFT civil proceeding the RBNZ has filed against a reporting entity in the last six months. This enforcement response promotes the AML/CFT Act's purposes, which are to detect and deter money laundering and the financing of terrorism; maintain and enhance New Zealand's international reputation; and contribute to public confidence in the financial system.
"This action again reinforces that prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable.
"The RBNZ expects all banks to have appropriate systems and resources in place to actively monitor customer accounts and transactions, supported by fit for purpose testing and assurance to fully comply with the requirements of the Act. These measures are essential to identify and mitigate potential money laundering or terrorism financing risks in a timely manner."
The Co-operative Bank has admitted liability for all three causes of action.
The parties have agreed to jointly recommend to the Court that a penalty of $1.425 million is appropriate in this case, though the penalty is ultimately for the Court to determine.
It is not alleged that The Co-operative Bank was itself involved in money laundering or the financing of terrorism.
