Money laundering probe exposes Australian banks’ compliance frailties

A money laundering probe at Commonwealth Bank of Australia (CBA.AX) is the latest in a slew of scandals denting the reputation of Australian banks as simple, reliable lenders at the forefront in the battle against financial crime.

Australian banks have lagged their global peers in both their spending and their approach on anti-money laundering and know-your-customer systems as they pursued rapid growth in customer deposits, some banking officials and experts say.

“In the last few years, regulators and banks have been focused on changing the whole bank culture to get all levels of staff taking compliance seriously,” said Philippa Allen, CEO of ComplianceAsia, which advices on compliance issues.