Is NAB The Lucky Bank of Australia?
After being battered by the banking royal commission in 2018 and then seeing its then chair and CEO depart as top-level sacrifices for the problems that emerged and weren’t addressed at the bank, the company seems to have forged a new path.
Much if that can be put down to new CEO Ross McEwan who ran the Royal Bank of Scotland from 2013 to October 2019 and learned a lot about repairing the image and performance of a ban that had fallen down on the job.
Monday’s announcement of an Enforceable Undertaking between the bank and AUSTRAC, the financial intelligence agency underlines the ‘rebirth’ of the NAB.
While it will have to spend heavily improving its anti money-laundering processes and undergo constant monitoring up till March, 2025, there will be no financial penalty for NAB from either AUSTRAC or APRA, the key bank regulator.
That’s a very different outcome compared with the way the Commonwealth Bank and Westpac were both hit by massive fines and a capital overlay penalty arrangement.
The Commonwealth and Westpac were fined a combined $2 billion following AUSTRAC investigations that revealed systemic non-compliance with anti-money laundering laws. APRA imposed penalty capital overlays (which effectively prevented both banks from growing their balance sheets by more than a certain amount, and therefore limited profits).
That didn’t in the end stop the CBA from regaining its strong earnings growth (or its $8 billion in buybacks over the past year) but the improvement only came after a clean out of the board and senior managers in the wake of both the AUSTRAC findings and the mauling the Commonwealth received from the banking royal commission.
AUSTRAC conducted a report last year that found the overall money laundering and terrorism financing risk for the banking industry remains ‘high’. But it is forcing banks to improve their processes.
The deal with AUSTRAC (the Enforceable Undertaking (EU) will hold NAB to improving systems, controls and record-keeping across its anti-money laundering program, including customer identification, customer risk assessment and due diligence, transaction monitoring and governance.
NAB said in Monday’s statement that it will be assessing the likely costs of delivering the requirements of the EU and will provide an update when the interim results are released on Thursday, May 5.
The agency started launched a formal investigation into NAB in June last year, where it determined financial penalties were not being considered and on Monday, the regulator confirmed this position had not changed.
AUSTRAC though will monitor NAB’s progress to ensure actions are taken within the required timeframe and maintain ongoing discussions between the regulator and bank.
An independent auditor will report to AUSTRAC annually NAB’s progress in improving its performance in this area.
A final report will be provided by March 2025 to the agency by NAB.
AUSTRAC chief executive Nicole Rose said the undertaking aims to ensure NAB complies with laws and combats the risk of serious and organised crime.
“National Australia Bank has demonstrated a commitment to uplifting its [anti-money laundering, counter-terrorism financing] controls, and has undertaken significant work identifying and implementing improvements to its programs,” Rose said in a statement on Monday.
“NAB has worked collaboratively with AUSTRAC throughout the investigation, and this enforceable undertaking will help to ensure NAB meets its compliance and reporting obligations,” Ms Rose said.
NAB shares eased 0.9% to $32.32 better than the wider market which was down 1.18% for the session or 88 points.
