Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on ASB being ordered to pay $6.731 million for breaching anti-money laundering laws

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Jenee Tibshraeny: NZ Herald Wellington business editor on ASB being ordered to pay $6.731 million for breaching anti-money laundering laws · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk st B.
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• 0:17
  Speaker 1: Andrew Dickens So.
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  Speaker 2: A New Zealand bank has been ordered to pay six
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  Speaker 2: point seventy three one million dollars for breaching anti money
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  Speaker 2: laundering laws. This is the largest penalty imposed by a
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  Speaker 2: New Zealand court under the Act. The bank is ASB,
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  Speaker 2: and The New Zealand Herald's Wellington Business editor Jena tim
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  Speaker 2: Trainey has been looking into this and joins me now Jenay,
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  Speaker 2: good evening, Good evening, Andrew, this is a big one.
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  Speaker 2: Tell me about the case and the big penalty.
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  Speaker 3: It is a big one. Basically, between twenty nineteen and
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  Speaker 3: twenty twenty five, AASP didn't have the right systems in
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  Speaker 3: place to check whether money transacting through the bank, to
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  Speaker 3: check that that money was that there was nothing illegal
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  Speaker 3: that that money was being used for, so not child
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  Speaker 3: exportation or drug trade, sanctioned contravention, that type of thing.
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  Speaker 3: It didn't have the right systems in place. It didn't
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  Speaker 3: do the right due diligence that's required under the Act.
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  Speaker 3: Now there is nothing to suggest here that the money
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  Speaker 3: going through ASB was launded money or illegal money, dirty money.
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  Speaker 3: But the problem here is that ASB didn't sufficiently check it. Now,
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  Speaker 3: the money that went through was a lot. It was
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  Speaker 3: in the billions of dollars, so significant. Some the Reserve Bank,
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  Speaker 3: which regulates banks at the moment for this type of thing,
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  Speaker 3: said ASP's efforts to address the issues were due to
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  Speaker 3: under resourcing because of commercial prioritization of other matters. That
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  Speaker 3: sounds a bit like ASB figured that its money was
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  Speaker 3: best spent on other things, not on systems to check
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  Speaker 3: for money laundering.
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  Speaker 2: Pretty amazing because I remember that I had to go
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  Speaker 2: through so much stuff with antior money laundering legislation that
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  Speaker 2: came through, with so many changes to all our systems,
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  Speaker 2: et cetera. And I just presume that the banks were
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  Speaker 2: already doing it, and I see Victoria Short said yep,
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  Speaker 2: well sorry, and we have invested significantly in training our
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  Speaker 2: people this sort of thing. We should have done right
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  Speaker 2: from the beginning. But the government is due to introduce
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  Speaker 2: a bill to parliament later this year.
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  Speaker 3: That's right. So the governments and officials you know, are
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  Speaker 3: of the view that the penalties under the legislation insufficient.
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  Speaker 3: For example, with this case, here we had, as I
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  Speaker 3: said before, billions transacted without being properly checked. The maximum
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  Speaker 3: penalty for that type of breach under the Act was
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  Speaker 3: only thirteen million dollars. Now ASB and the Reserve Bank
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  Speaker 3: agreed that ASB would pay about half of that. So
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  Speaker 3: six point seven million dollars that is chump change for
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  Speaker 3: a bank like ASB. You know, it's aboutzero point two
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  Speaker 3: percent of its annual profit. You know, you could argue
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  Speaker 3: that that is just ASB could just see that as
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  Speaker 3: a cost of doing business. You know, six million dollars
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  Speaker 3: could be much less than the cost of investing in
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  Speaker 3: systems to comply with the law. So the government is
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  Speaker 3: aware of this issue, not necessarily because of this case,
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  Speaker 3: but more broadly. For example, in twenty twenty four in Australia,
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  Speaker 3: sky City Adelaide was fining sixty seven million Australian dollars
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  Speaker 3: for breaches of money laundering rules. Sky City, New Zealand
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  Speaker 3: was only fined four million. Pretty big difference, and they
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  Speaker 3: reckon that the issues were comparable. So government has said
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  Speaker 3: later this year it'll introduce a bill to Parliament to
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  Speaker 3: increase the penalties.
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  Speaker 2: When you started talking about billions of dollars launded and
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  Speaker 2: then a six point seventy three one million dollar fine.
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  Speaker 2: I did start thinking chump change a bit. Can you
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  Speaker 2: summarize why this case is so important?
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  Speaker 3: Yeah, Look, I mean banks have such an important role
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  Speaker 3: in our society. We transact through them, and rightly or wrongly,
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  Speaker 3: we've decided that, you know, that the onus is on
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  Speaker 3: them to some degree to check that the money going
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  Speaker 3: through is clean. Basically, it's a big important job. And
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  Speaker 3: as you said before, Andrew, that that process has proven
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  Speaker 3: quite cumbersome for people. You know, if you want to
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  Speaker 3: get a mortgage, or if you want to do something,
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  Speaker 3: if you transact in cryptocurrencies, then these money laundering ruels
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  Speaker 3: can cause you a headache, can make it difficult because
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  Speaker 3: the banks needing to be very super cautious that the
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  Speaker 3: money is clean. But you know, it is important with
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  Speaker 3: something so important, that the penalties are proportionate and that
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  Speaker 3: banks don't just see this as a cost of doing business.
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  Speaker 3: So we'll have to wait and see what the law
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  Speaker 3: change looks like, but it seems like something needs to
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  Speaker 3: be done.
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  Speaker 2: Oh well, good stuff, good reporting, and I thank you
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  Speaker 2: so much as Jenatib Trainey, who is the New Zealand Herald,
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  Speaker 2: Wellington Business Editor.
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