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.
Dow Jones up 25. Dollar 79.1 US cents.
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