TSB Bank was fined $ 3.5 million for violating money laundering regulations.
Photo: RNZ / Claire Eastham-Farrelly
The Reserve Bank (RBNZ) brought the case after the TSB failed to fix the bugs in its systems it was warned about in 2016.
RBNZ Deputy Governor Geoff Bascand said the TSB had violated fundamental parts of the law.
“Although the TSB has now initiated a recovery program, these proceedings were an escalated regulatory response from the Reserve Bank to the continued non-compliance with the TSB following a formal warning to the TSB in 2016.”
The RBNZ and the TSB agreed on the facts and on a proposed penalty to be agreed by the court.
The TSB was not involved in money laundering or terrorist financing, but it did not have adequate systems in place to ensure compliance with the law.
Other violations included failing to conduct the required risk assessment in real estate deals and failing to consider some of the countries with which it did business.
As early as 2013, the RBNZ asked the TSB to improve its compliance and officially warned the bank at the end of 2016 of its shortcomings and lack of progress in rectifying them.
“The AML / CFT Act went into effect eight years ago and we expect companies to be aware of their commitments and to comply with them,” said Bascand.
TSB chairman John Kelly said the bank was disappointed to face the charges and sentences.
“Although the bank was not accused of money laundering or terrorist financing and the customers were not endangered, the TSB acknowledged that it has to deal with some areas of AML / CFT compliance and an extensive work program has been put in place over the past two years to do.”
He said there was still much to be done but had made progress and was “committed to raising the bar on compliance management and risk maturity.”
