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Commonwealth Bank of Australia (CBA) confirmed on Friday that its internal reporting had flagged shortcomings in its monitoring of offshore transactions as early as February, well before it was accused of facilitating illicit transfers, according to Reuters.
The revelation shows Australia’s biggest bank knew it had major deficiencies in its anti-money laundering and terror financing protocols before regulators first informed it in July of suspected criminal activity on thousands of accounts.
In an unprecedented scandal that has shaken Australia’s banking sector, CBA is facing potentially billion of dollars in fines after it was sued by financial crime fighting agency AUSTRAC last month for alleged money-laundering breaches.
Investors are now worried that the A$130 billion ($103.17 billion) lender, which posted its eighth straight record cash profit on Aug. 9, could come under the scrutiny of foreign regulators for possible breaches across its global platforms.
“There are some legitimate concerns if overseas regulators get involved, other jurisdictions get involved,” said Rohan Walsh, a portfolio manager at Karara Capital which owns CBA shares.
“The penalties could be quite significant on a worst-case type of outcome.”
The revelations have also renewed criticism of the government for resisting calls for a powerful judicial inquiry into Australia’s banking system, following a series of scandals including insurance fraud and interest rate rigging.
“There’s only so long they can go without it,” said Omkar Joshi of Regal Funds Management, which owns CBA shares.
CBA shares closed 0.42 percent lower on Friday to A$75.48, while the broader market was up 0.17 per cent.
The stock is down 10 per cent since AUSTRAC filed its suit on August 3, wiping roughly A$14 billion off the company’s market capitalisation.
The AUSTRAC case has triggered a landslide of bad news for CBA, with two other Australian regulators subsequently launching investigations and a major law firm threatening to file a class action on behalf of shareholders.