Australia’s biggest bank facing trillion dollar fines for money laundering

Even the Commonwealth Bank’s staunchest critics wouldn’t have predicted this one.

This is the bank potentially blowing itself up.

CBA is facing fines of about a trillion dollars for nearly 54,000 breaches of Australia’s money-laundering laws dating back to 2012.

A trillion dollars, which is a thousand billion. About seven times Commonwealth Bank’s market value.

If it comes to that, it simply won’t be able to pay.

According to the money-laundering watchdog, AUSTRAC, “the effect of CommBank’s conduct in this matter has exposed the Australian community to serious and ongoing financial crime”.

Commonwealth Bank CBA Ian Narev money laundering fines

It doesn’t get any worse than this.

It’s not a financial planning scandal where tens of thousands of customers get ripped off blind, and the bank makes millions of dollars out of them.

Or CBA overcharging its customers by more than $100 million.

It’s not CommInsure refusing to pay out legitimate claims from people with terminal illnesses, saving the bank millions.

Banks are meant to be the watchdog for suspicious activity involving criminals and money.

For example, in the current climate it’s a key plank in the fight against terrorism.

To abrogate that responsibility is beyond belief.

And yet, if Commonwealth Bank is true to form, no senior executives will be held to account for this latest scandal.

That is, sacked.

No wonder calls for banking inquiry are growing

Remember last October when CBA CEO Ian Narev was being grilled by a federal parliamentary committee over the financial planning scandals?

“At this stage we have not had individuals terminated as a result of this because we have not seen the need to do that,” he said.

Destroying thousands of people’s lives is not a sackable offence at the Commonwealth Bank.

Will potentially destroying the bank be a sackable offence?

Mr Narev was paid $14 million last year for a job which is effectively government guaranteed.

While no-one is suggesting he had any direct involvement in any of the scandals which have plagued the bank under his watch, ultimately, if you are going to take the big bucks, the buck stops with you.

It’s Mr Narev’s job to put the people and systems in place to ensure his company, which incidentally is Australia’s biggest, operates to the highest legal, ethical and monetary standards.

That clearly has not happened at CBA.

No wonder the calls for a Royal Commission into the banks are growing louder and no wonder the Government was able to impose an extra tax on banks in the Budget.

They’re fast losing their social licence to operate.

But this one is different, and Ian Narev and his senior management team may not be able to escape unscathed.

Ripping off customers is one thing. Destroying shareholders’ money is a totally different story.

Unlike customers, shareholders have a powerful voice. They’re the owners.

If the value of the Commonwealth Bank is seriously damaged by the money-laundering fiasco, you can bet they won’t take that lying down.

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