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TSB agrees to $3.85m penalty for money-laundering failures

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TSB has agreed to pay $3.85 million in penalties after acknowledging it failed to comply with rules designed to prevent the bank being used for money-laundering.

TSB and the Reserve Bank, which polices anti-money laundering (AML) rules, presented the settlement for approval by the High Court in Wellington on Thursday, after the Reserve Bank filed legal action in May.

Appearing for the Reserve Bank, Richard May, a partner at Luke Cunningham & Clere, set out details of four breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act to Justice Jillian Mallon.

The action comes five years after TSB was formally warned for risk assessment and compliance failures.

May told the court “it was not suggested there has been actual financing of terrorism or money-laundering occurring”.

But he said the breaches were serious, because they concerned “the adequacy and effectiveness of the very processes by which an entity such as TSB is required to comply with the act and ensure it is complying”.

“To put it another way, if these controls aren’t in place or aren’t operating effectively, then it could not have known if financing of terrorism or money-laundering was occurring.”

TSB lacked adequate procedures, processes and controls, failed to review its AML programme, and did not conduct a risk assessment of its real estate business as it was supposed to do, he said.

Source: RiskScreen

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