The Commonwealth Bank is facing a potential shareholder class action over its failure to alert the market about money laundering through its intelligent deposit machines.
Plaintiff law firm Maurice Blackburn and litigation funder IMF Bentham are set to launch a class action against the Commonwealth Bank relating to AUSTRAC's allegations.
AUSTRAC has filed a civil case against CBA relating to the bank's failure to report attempts to launder money through its so-called 'intelligent deposit machines' (IDMs).
Specifically, the regulator has accused CBA of 53,700 contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) relating to the IDMs between November 2012 and September 2015.
IMF Bentham director Hugh McLernon said shareholders who purchased Commonwealth Bank shares between 17 August 2015 to 3 August 2017 and still held these shares after that period would be able to register a claim on the IMF website.
“CBA is facing most serious allegations from AUSTRAC, and there are serious questions to be answered about what the company knew and when,” Mr McLernon said.
Maurice Blackburn national head of class actions Andrew Watson said if AUSTRAC’s allegations against CBA were proven correct, this demonstrated the bank’s “abject failure” of corporate governance and risk management.
“The failure to make proper disclosure to the market regarding those failures adds insult to injury for shareholders,” Mr Watson said.
Shares dipped after news of AUSTRAC’s legal action against CBA was made public, dropping from $84.69 on 3 August 2017 to $80.11 four days later.
Mr Watson said, “Our investigations and analysis show that this drop was in the top 1 per cent of price movements that CBA experienced in the past five years, making it apparent that the news was of material significance to shareholders.”
Later in the day, Commonwealth Bank responded with a brief statement acknowledging Maurice Blackburn and IMF Bentham’s partnership.
“We are aware that Maurice Blackburn and IMF Bentham announced today that they are investigating a potential shareholder class action against Commonwealth Bank,” the statement said.
“Commonwealth Bank has not been served with any legal proceedings.
“We will keep the market informed of developments.”
CBA’s executive team had their bonuses cut to zero following the AUSTRAC accusations.