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The Reserve Bank - Te Pūtea Matua welcomes the High Court’s decision to impose a civil penalty on TSB Bank Limited for breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).
The High Court at Wellington today released its decision following a statement of claim filed by the Reserve Bank in May 2021. The statement of claim was supported by a statement of the facts as agreed by TSB and the Bank, and a joint submission on the appropriate penalty. The Court ordered TSB to pay civil penalties totalling $3.5m based on TSB’s acceptance that it did not comply with the requirements of the AML/CFT Act to:
- have adequate and effective procedures, policies and controls for monitoring and managing compliance with its AML/CFT programme;
- review and maintain its AML/CFT programme;
- conduct a risk assessment in respect of its real estate operations and;
- have regard to certain countries it deals with when reviewing its 2017 risk assessment.
“The penalty reflects TSB’s failure to comply with fundamental elements of the AML/CFT Act. While TSB has now embarked on a remediation programme, these proceedings were an escalated regulatory response by the Reserve Bank to ongoing non-compliance by TSB following a formal warning issued to TSB in 2016,” Reserve Bank Deputy Governor and General Manager of Financial Stability Geoff Bascand says.
The judgment provides helpful guidance for future cases. In particular, the Court accepted the parties’ submission that TSB’s failure to respond appropriately to a formal warning issued in 2016 was an aggravating factor. The judgment also provides guidance on the appropriate level of discount in cases where breaches are admitted.
“The AML/CFT Act came into effect eight years ago and we expect firms to be aware of, and to comply with, their obligations,” Mr Bascand says.
These were the first civil proceedings taken by the Reserve Bank under the AML/CFT Act.