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Abu Dhabi, UAEWednesday 20 June 2018

Embattled Australian bank admits failures costing staff and customers millions

CBA also faces legal action over alleged money-laundering and terror financing

Commonwealth Bank of Australia branch in Sydney. Bank is facing allegations of money-laundering and terrorist-financing laws. Photographer: Brendon Thorne / Bloomberg
Commonwealth Bank of Australia branch in Sydney. Bank is facing allegations of money-laundering and terrorist-financing laws. Photographer: Brendon Thorne / Bloomberg

Australia's biggest bank has admitted failures costing staff and customers millions of dollars as the troubled lender faces legal action over alleged breaches of money-laundering and terror financing laws.

The Commonwealth Bank of Australia (CBA) was thrown into turmoil by a civil case launched earlier this month by financial intelligence agency Austrac for alleged "serious and systemic non-compliance" with the laws.

The case has overshadowed record annual profits and forced the bank to announce the retirement of its chief executive.

The embattled lender, Australia's largest firm by market capitalisation, has now said it was working to remedy other errors worth millions of dollars linked to customers' insurance, transactions, and staff pension payments.

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"We are providing an additional update on other issues we are putting right for our customers and employees," CBA said late Monday, adding that the statement was "not an exhaustive list of all regulatory matters".

The shortfall in staff pension payments is initially expected to amount to A$16.7 million (Dh47.7m) plus interest, with the full costs yet to be finalised.

Refunds to customers over disputed card transactions added up to some $5m, while the bank said it had notified corporate regulator Asic over a probe into whether it did not cancel insurance to some deceased estates.

Following scrutiny over the Austrac action, the bank said Monday that chief executive Ian Narev would retire by the end of the 2018 financial year.

That prompted a spate of disgruntled remarks on social media, with some claiming the decision was not before time. The journalist Peter Ryan sparked a rash of derisory comments when he tweeted that the bank had said it would be seeking a replacement "with a moral compass".

The company added last week the pay and bonuses of top executives were to be slashed. CBA could face fines running into billions of dollars from the Austrac case.

The bank is also facing an investigation from Asic over its handling of the alleged breaches.

The latest revelations are not linked to the regulatory investigations the lender faces.

The CBA has been delivering bumper returns for shareholders in recent years, but has also been hit by scandals over poor financial planning advice and insurance payouts.