CBA atm machine that accepts cash deposits, on Smith St Collingwood, Melbourne. August 3rd 2017. Photo: Daniel PockettTwo men recently jailed over a $2 million money laundering plot using a “cuckoo smurfing” scam are among 11 people already jailed as part of criminal syndicates caught exploiting Commonwealth Bank accounts to wash money.
Arlsan Shaffi and Salman Khan were arrested in May 2015 after laundering money using more than 100 CBA accounts in a complicated money-shifting scam.
The pair was jailed for a scheme involving the transfer of money between associates in separate countries in a manner that avoids the need for these parties to transfer money across borders and raise suspicions.
The pair laundered $1.78 million in cash deposits through 101 CBA bank accounts in 255 separate transactions. Authorities are now investigating the pair over at least another $3 million for offences under money laundering and counter-terrorism financing laws.
The revelations come as pressure builds on the bank to respond to allegations ahead of next week’s full-year results, which are expected to show another record profit of nearly $10 billion. Austrac has accused the bank of breaching anti-money laundering and anti-terrorism financing laws in a statement of claim in court.
The nearly 600 pages of allegations lodged in the Federal Court detail examples of organised crime figures laundering money through CBA’s high-tech ATMs while the bank either failed to detect the transactions or failed to tell authorities.
Austrac alleges CBA failed to detect, review and report years of suspicious transactions worth millions of dollars involved in money laundering by drug syndicates.
At dozens of ATMs across Sydney and Melbourne, from Bondi Junction through Haymarket to Burwood, and in Melbourne from Chadstone to Springvale, Austrac alleges foreign nationals were part of four criminal syndicates that exploited a loophole in the bank’s technology that didn’t cap the number of cash deposits to its new ATMs.
Criminal syndicates would then transfer money offshore.
Members of four syndicates have already been jailed, including Yuen Hong Fung (6 years) and Yeuk Tung Kong (7.5 years). Shaffi was sentenced to five years’ jail and Khan three years.
Austrac alleges that in one case, after the n Federal Police (AFP) informed CBA of laundering allegations, the bank did not act to manage the money-laundering risk.
Among other allegations, Austrac details: CBA never assessed the money laundering and terrorism-financing risks it faced from its new ATMs prior to their launch in May 2012 and at no time prior to July 2015 did it take any steps to assess their risk;Nearly $9 billion in cash was deposited through CBA’s new ATMs before it conducted any assessment of the money laundering and terrorism-financing risks associated with the machines.
While banks are required to tell authorities within three days about suspicious transactions, transactions above a certain limit and concerns about fake identities, CBA sometimes took months to report concerns and in other cases never reported concerns, it’s alleged.
In one instance, the AFP told CBA it suspected a customer believed to have laundered money had used fake identities.
The group head of anti-money laundering at the bank emailed to say: “Given the nature of the matter, I would have thought SMRs [suspicious matter report] are appropriate on all the clients?”
Yet according to the statement of claim, CBA “at no time” lodged an SMR with Austrac.
In another example, there is a two-week gap between when concerns about “blatant intense structuring activity” were raised within the bank on June 13, 2015, and when the customer’s account was closed.
“It was not until 1 July 2015 that CommBank put a stop on this account at the request of the AFP,” court documents say.
In court documents, CBA blamed “systems error” for failing to comply with transaction monitoring.
The bank’s chief executive, Ian Narev, who will present the bank’s results next week, wrote to staff on Friday, saying the bank would lodge a defence to the claims.
It came as CBA’s share price tumbled 3.9 per cent, as analysts predicted a royal commission into the financial sector was now more likely.