Money Minute – August 8 2017 CommBank’s Legal Fight

Commonwealth Bank Legal Fight

The allegations against the Commonwealth Bank continue to reverberate through the financial sector and the political community.

As we told you yesterday, the bank put out a statement saying mistakes can be made in a big organisation. That it takes its obligations seriously.

But the feeling was this statement was designed to frame the commonwealth bank defence: that there was only one breach of security … caused by a software problem … not more than 53,000 breaches as alleged by AUSTRAC.

That’s because the maximum fine is $18 million per breach. If the maximum fine were imposed … it would cripple Australia’s largest bank…Australia’s largest company.

But do not pretend the Commonwealth is the only bank that’s been down this path.

Take HSBC. US lawmakers targeted the bank for allowing billions of dollars to be filtered through its accounts unchecked around five years ago.

Among those who used the bank: Mexico’s Ainaloa drug cartel and Colombia’s Norte Del Valle. They channelled $881 million through the accounts.

The head of HSBC compliance resigned – in front of a US Senate committee. Its US chief said: We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again.

The US fined HSBC $1.9 billion.

Similarly, standard chartered bank was fined $327 million. ING bank was fined $619 million.

So the mood of regulators around the world is not for soft fines for banks for big misdemeanours. That is something, ultimately, the Federal Court will decide.

Remember, also, the once largest bank in the world – Germany’s Deutsche Bank – was fined $7.2 billion for mis-selling toxic mortgage backed securities. It is nowhere near the biggest bank in the world after that.

Right now the Commonwealth is the 22nd largest bank in the world.

I’d humbly suggest … right now … it should be grateful these mistakes did not occur in the United States.

Given the size of those fines … this case is a test for the bank, and for our courts. 

Markets

Dow Jones up 25. Dollar 79.1 US cents.

Other recent articles

08-08-2017 Will CBA scandal have a long term impact?

07-08-2017 9News: CBA in Damage Control

07-08-2017 Commonwealth Bank money laundering allegation

07-08-2017 Money Minute – August 7 2017 CommBank Defence

07-08-2017 Pressure intensifies for royal commission following CBA laundering allegations

03-08-2017 Commonwealth Bank accused of money laundering

27-07-2017 Dollar goes through 80 U.S cents

04-07-2017 Coopers Beer Chairman lashes out at Bank Tax

18-05-2017 Treasurer Scott Morrison – “Let me tell you about Ken Henry…”

12-05-2017 9News: CBA CEO hits back at bank tax

12-05-2017 Bank Tax War – CBA CEO Hits Back at Bank Tax

Leave a Reply

Your email address will not be published. Required fields are marked *

393 More posts in News category
Recommended for you
Five superannuation tips to make your life easier 

Five superannuation tips to make your life easier Make sure you Super fund has your...