The Reserve Bank has filed civil proceedings against The Co-operative Bank for three breaches of anti-money laundering requirements dating back to at least 2020, with both parties agreeing to a $1.425 million penalty.
The Reserve Bank has taken The Co-operative Bank to court over failures to meet anti-money laundering and countering financing of terrorism obligations, in a case that dates back to compliance issues identified from at least 2020.
The civil proceedings, filed in the Wellington High Court on May 28, relate to three breaches of core requirements under the AML/CFT Act. The Reserve Bank's claims center on transaction monitoring: the bank's rules were not operating correctly, its assurance activities were inadequate, and it failed to maintain required records. As a result, higher-risk transactions and customers went unidentified, and enhanced due diligence was not carried out in a timely way.
The two parties have agreed to jointly recommend a penalty of $1.425 million to the court — though the final amount is for the judge to determine. The Co-operative Bank has admitted liability for all three causes of action.
What the bank says
The Co-operative Bank was clear that no customers were found to have been adversely affected. "There are no allegations that the Bank has been involved in money laundering, terrorist financing or any other criminal activity, or that the non-compliance has resulted in adverse customer impacts," chief executive Mark Wilksbury said. He said the bank had worked constructively with the Reserve Bank and had taken steps to strengthen its systems, with improvements already in place and further changes planned.
A broader pattern
The Reserve Bank noted this was its second AML/CFT civil proceeding in six months, following action against ASB over foreign trust monitoring failures involving $937 billion in transactions. Acting Assistant Governor of Financial Stability Angus McGregor said the cases reinforced that "prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable."
The case also arrives as the regulatory landscape is about to shift. From July 1, the Department of Internal Affairs becomes the single AML/CFT supervisor, taking over from the Reserve Bank and the Financial Markets Authority. The DIA is supportive of the proceedings and will take carriage of the case from that date.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.