Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on ASB facing a $6 million dollar fine for breaching anti-money laundering rules

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Jenee Tibshraeny: NZ Herald Wellington business editor on ASB facing a $6 million dollar fine for breaching anti-money laundering rules · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B. Follow
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  Speaker 2: Right now. It's twenty five away from seven now. ASB
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  Speaker 2: is facing a fine of around six million dollars for
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  Speaker 2: breaching anti money laundering rules. This is called the attention
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  Speaker 2: of The Herald's Wellington Business editor g Natives Trainer, who's
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  Speaker 2: with us elo Jane Hi Heather. Quite a remarkable thing
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  Speaker 2: that this has happened to ASB, given that they surely
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  Speaker 2: would have all kinds of safeguards and places, wouldn't they.
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  Speaker 3: Well, you'd think so because much has been made of
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  Speaker 3: these anti money laundering and countering the financing of terrorism laws.
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  Speaker 3: So New Zealand is part of an international regime. Basically,
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  Speaker 3: banks need to make sure that any money they take
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  Speaker 3: in they need to know exactly where that's coming from,
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  Speaker 3: because they can't be sort of complicit in money laundering
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  Speaker 3: or you know, it could be like the drug trade
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  Speaker 3: or going again, transferring money that's against sanctions. So you know,
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  Speaker 3: banks have kind of the spotlight has been on banks
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  Speaker 3: for some years. It's been so much so that they've
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  Speaker 3: sort of blanket de risked. That's what the industry calls
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  Speaker 3: it where they've said, we're not doing any business with
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  Speaker 3: money remitters or nothing to do with cryptocurrency because of these,
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  Speaker 3: you know, because we have to comply with these anti
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  Speaker 3: money laundering rules. But as it's turned out, the reserve
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  Speaker 3: banks took ASP to court, ASP acknowledges you know that
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  Speaker 3: it's done the wrong thing by law because it hasn't
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  Speaker 3: had the right systems in place since at least twenty nineteen. Wow,
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  Speaker 3: So you know there's a rafter things that didn't have
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  Speaker 3: the right compliance program, didn't do sufficient due diligence, didn't
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  Speaker 3: terminate business relationships as required, and the money that went
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  Speaker 3: through ASP that wasn't properly checked was you know, transactions
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  Speaker 3: worth about ten billion dollars.
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  Speaker 2: Why do we know why they were so sloppy.
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  Speaker 3: Well, it's a good question. I suppose these systems are
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  Speaker 3: expensive and cumbersome. The industry will say that the ACT
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  Speaker 3: is not fit for purpose, that it's too clunky, and
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  Speaker 3: that it actually you know, doesn't support the economy because
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  Speaker 3: you hear from businesses who say they have to jump
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  Speaker 3: through so many hoops in order to get a bank
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  Speaker 3: to bank them, so that that's what their argument would
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  Speaker 3: be the thing that struck me with this is that
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  Speaker 3: the penalty is six point seven million dollars isn't a
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  Speaker 3: lot of money for a bank if you think of
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  Speaker 3: breaches that go all the way back to twenty nineteen,
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  Speaker 3: and you know, under an act that is supposedly so
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  Speaker 3: heavy handed that it's you know, caused banks to stop
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  Speaker 3: banking a whole bunch of businesses, including sort of entire sectors.
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  Speaker 3: So I think that the question this raises as well,
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  Speaker 3: is the Act actually entirely fit for purpose? And are
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  Speaker 3: these penalties large enough to encourage banks to put the
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  Speaker 3: right systems in place, because you know, seven, yeah, six
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  Speaker 3: million dollars is not not much more for a bank.
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  Speaker 2: Quite yeah, you're almost not saying this is the case,
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  Speaker 2: but you'd almost be incentivized to just take the fine
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  Speaker 2: so you don't have to actually do all the redtape.
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  Speaker 2: I thought that there was some sort of like I
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  Speaker 2: might be imagining it, but I thought that there was
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  Speaker 2: some sort of moves afoot to maybe have a look
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  Speaker 2: at the AML and deal with it. Am I am,
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  Speaker 2: I right.
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  Speaker 3: You're right, there are moves afoot, and I'm not sure
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  Speaker 3: exactly what that would mean for banks. I think the
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  Speaker 3: spotlight has been on banks most heavily so under the
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  Speaker 3: new rules, if you're an accountant, or lawyer or real
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  Speaker 3: estate agent, you know you have to make sure that
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  Speaker 3: your client's money is clean basically, But where the rubber
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  Speaker 3: really hits the road is where the bank, because the
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  Speaker 3: bank transacts the money. So my belief is, even if
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  Speaker 3: the rules are made a bit easier, the owners is
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  Speaker 3: still largely on the bank. So I guess for the
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  Speaker 3: bank to end up in court is quite a big deal.
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  Speaker 3: This has only ever happened as well with TSP. It
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  Speaker 3: found itself in court. I think it was fined about
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  Speaker 3: three million dollars. It's a bit more money TSPs a
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  Speaker 3: smaller bank. But I think I'm still trying to get
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  Speaker 3: my head around why banks are so risk averse when
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  Speaker 3: the penalty is so low. Yes, And the difficulty with
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  Speaker 3: this head is to get anyone to talk to you
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  Speaker 3: about it is hard because all the lawyers in the country,
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  Speaker 3: whoever real expertise in this area, have clients who are banks.
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  Speaker 3: So it's an issue that the people in the know
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  Speaker 3: are very kind of hesitant to talk about it.
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  Speaker 2: I love that, you know, Thank you very much. Moye
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  Speaker 2: when we may never find out. Janative trainee, The Herald's
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  Speaker 2: Wellington Business edited.
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