CBA Faces Potential Class Action Following Money Laundering Allegations

The Commonwealth Bank faces what could be the largest shareholder class action suit over its disclosure of more than 53,000 alleged breaches of anti-money laundering laws.

Maurice Blackburn Lawyers said it would investigate a potential class action on behalf of the bank’s investors, which comes after a sharp fall in its share price when the scandal emerged.

CBA admitted the board was aware of the breaches during the second half of 2015, but the bank did not say anything to the stock exchange until August 4 this year.

Maurice Blackburn said it was “astounding” that the bank did not say anything about the alleged breaches earlier.

The action will be focused on how the bank failed to properly report or monitor suspicious transactions, and its ATMs were used by criminal gangs to wash millions of dollars.

Regulator AUSTRAC has launched civil proceedings against CBA, accusing the bank of failing to comply with anti-money laundering and counter-terrorism financing laws.

“Austrac alleges that CBA contravened the AML/CTF Act on more the 53,000 occasions,” Maurice Blackburn national head of class actions Andrew Watson said.

“The Austrac allegations are extensive and it is astounding that the market would not be advised of such serious breaches as soon as the company became aware of them.”

The bank said it was not aware of Austrac’s civil suit until it was lodged on August 3.

It has not said when the bank became aware Austrac was conducting an investigation into the bank, but said it complied with disclosure obligations requiring companies to tell investors about news that is “material”.

Each infringement of the Anti-Money Laundering and Counter-Terrorism Financing Act carries a maximum $18 million fine.

Mr Watson said he was confident the action would proceed and the size was likely to be very large because of the high number of shareholders.

“On any view it’s going to be a very large claim,” he said.

CBA’s 800,000 shareholders suffered a significant share price drop following news of the AUSTRAC proceedings.

The price fell from an intraday high of $84.69 when the action was announced on the Thursday and opened at $80.11 on the following Monday.

The class action is only open to shareholders who bought CBA shares between August 17 2017 and August 3 this year, and who still held some stock on the afternoon of August 3.

Picture Courtesy: Kgbo

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