HSBC in 2012 was a glaring example for all Banks to comply with AML/CTF

In 2012 Banks around the World shuddered after HSBC settled in the U.S. for $1.9B in relation to non-compliance of anti-money laundering legislation. Whilst a staggering amount, the amounts theoretically possible if it was determined by the U.S. Courts made such an amount seem like chicken feed.

It was alleged that money-laundering on a large scale was occurring through HSBC accounts via numerous countries like Mexico and Colombia and various U.S. sanctioned countries like Iran, Libya and Sudan. The settlement at the time was howled at by the public as being light on. It also resulted in no prosecutions against senior executives and the AML/CTF officers of HSBC. Part of the settlement provided various undertakings from HSBC to get their AML/CTF house in order and linked the payment of senior executive bonuses to meeting such undertakings and terms of settlement.

The near trillion dollar damages amount being bandied around in relation to the latest AUSTRAC claim against CBA whilst theoretically possible, is highly unlikely. The likely result, assuming CBA has no defense or mitigating circumstances, is that a similar HSBC style settlement will be brokered and the interest should be in the undertakings given, the amount of settlement, shielding of senior executives and the AML/CTF officers of CBA and whether bonuses and salary increases will be placed in escrow pending compliance with any terms of settlement.

All lenders, their Boards (who sign off on the AML/CTF program and reports each year) and the AML/CTF officers will no doubt be double-checking their AML/CTF compliance, software and systems.

The reality is, CBA is too big to fail but no doubt will have to show some pain in any settlement brokered to avoid the howls of a Royal Commission.