Commonwealth Bank of Australia's Anti-Money Laundering Breach

This paper mainly focuses on the news article published by ABC on 4th June 2018 and name of this article is “Commonwealth Bank of Australia to pay $700 million over anti-money laundering and counter-terrorism law breaches”. On the basis of this article, numbers of questions are answered. Lastly, paper is concluded with the brief conclusion.

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Business Plan

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Introduction:
Ethics is defined as the branch of philosophy in context of all the aspects related to the
human behavior. Ethics is considered as the broad term which determines the rightness and
wrongness of any action conducted by individual, and there are number of theories through
which it is determined. Business ethics is also known as the corporate ethics, and it is considered
as the form of applied and professional ethics which mainly examines the ethical and moral
principles and issues that resulted from the business environment. It is also defined as the written
and unwritten codes of the principles and values which are determined through the culture of the
organization that govern the decisions and actions within the organizations. It is applied on all
the aspects of the business operations in context of both individual and the whole company
(Norman, n.d.).
This paper mainly focuses on the news article published by ABC on 4th June 2018 and
name of this article is “Commonwealth Bank of Australia to pay $700 million over anti-money
laundering and counter-terrorism law breaches”. On the basis of this article, numbers of
questions are answered. Lastly, paper is concluded with the brief conclusion.
Arguments related to the article:
The Commonwealth Bank of Australia (CBA) imposed with the biggest fine in the
corporate history of Australia in context of breaching the laws related to the anti-money
laundering and counter-terrorism financing, and this fine resulted in the millions of dollars. CBA
agreed to pay this fine, as bank pay $700 million which also includes the legal costs after the
accusation made by the federal financial intelligence agency AUSTRAC in last year. This
agency accused the bank in lieu of serious and systematic failures for reporting the doubtful
deposits, transfers, and accounts.
In terms of the settlement, CBA admitted the allegation related to the late filing of 53,506
reports of transactions of $10,000 or more by the way of "intelligent deposit machines" (IDMs).
Later, bank decided to admit maximum breaches alleged by the agency (The Guardian, 2017).
It is necessary for the CBA to file report related to these large transactions within the
period of 10 business days, so that AUSTRAC can monitor them to check in case money going
to crime gangs or terrorist networks. Originally, CBA challenge the number of allegations made

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by the AUSTRAC, and present the argument that single coding error result in the failure of
reporting the 53506 transactions.
For the period of 3 years, bank also failed in monitoring the transactions on 778,370
accounts for the purpose of checking the money-laundering red flags. Bank also admits the 149
suspicious matters which were filed late or not filed at all. Additionally, bank also breach its
obligations to perform the checks on 80 suspicious customers and transaction monitoring dis not
operate in such manner as intended related to the number of accounts between the periods of
2012-2015 October.
Investigation is also conducted by the AUSTRAC and exposed 14 occasions in which
CBA failed to assess the risk in proper manner in context of IDM’s. While number of
transactions are related to the legitimate purposes, and the bank has admitted that it failed to
report the millions of dollars which suspect the money laundering. AUSTRAC suspected that
some other transactions are also there which are not detected in context of money laundering
through the accounts of CBA (Reuters, 2018).
Ethical issues:
Money laundering is considered as the process through which criminal attempt is made
by the business to hide the true origin and ownership of the proceeds of their criminal activities.
In case activities are undertaken in successful manner, and it allowed them to maintain the
control over those proceeds and ensure legal cover for the source of their income (ICPAP, n.d.).
Money laundering inclines the allocation of the dirty money across the globe in context
of avoiding the national controls and therefore polluted the money tends that flow to countries
with less stringent controls. Large number of effect is imposed by the money laundering on the
business organizations that were used for the purpose of crime. It must be noted that integrity of
the bank and their financial services are based on the professionalism and ethical standards, and
the reputation of the organization is considered as the most valuable assets in terms of the
financial business. Business ethics play most important role in maintaining and enhancing the
reputation of the business. Ethical code of conduct ensures that financial business is conducting
all their operations in legal and ethical manner. In case financial business is manipulated through
the schemes of the money laundering, then business organization is used by the criminals and

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business itself becomes the part of the criminal network. Terrorism is the biggest issue which
faces by the society and if any business involved in the money laundering then it can be
considered that such business is supporting the terrorism activities. This approach of the financial
institutions also damage the reputation of other institutions involved in similar industry, and also
breach the trust of customers. Customers and society consider that business untrustworthy and
this will ultimately results in the loss of profitability and customer base, and no one prefer to do
business again with these corporations. Money laundering mainly ensures the corruption and
crime and also damages the society’s integrity and also undermines the democracy and rule of
law. In context of the present case, activities of the CBA fall under the money laundering
prospect and clearly states that bank is involved in the unethical practices and fails to fulfill its
duty towards the society.
Opinions in context of ethical decision making:
Bank play most important role in fighting the crime related to financial transactions and
also protects the integrity of the financial system of the country. For gaining this position, CBA
also agreed with the view point of the AUSTRAC that they must work together for resolving the
issue highlighted above. For the purpose of reaching this position, CBA also agreed to make
necessary changes which are sated in the recent years as part of the comprehensive program and
for improving the operational risk management and compliance. For breaching the laws,
AUSTRAC imposed the penalty of $700 million on the CBA. This penalty is the biggest penalty
imposed on any organization in the corporate history of the Australia (NZherland, 2018).
In my opinion, this financial penalty imposed on the CBA is sufficient and it justified the
actions conducted by the CBA in context of money laundering laws. However, an activity
conducted by the CBA promotes and encourages the criminal activities, and this offense of the
CBA cannot be justified only through the criminal prosecution. Court fails to provide any
criminal prosecution to the involved persons in this context, and this makes this decision ethical.
Therefore, from my point of view this decision is not ethical in nature and must involve criminal
prosecutions also.

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Ethical decision making process:
Following is the ethical decision making process on the basis of the seven moral philosophies
which must be used by the CBA for ensuring ethical standards:
 People act in irrational manner because of the fear of being punished by the HRM
guidelines and terror created by the authority. it is necessary to ensure that HRM
guidelines
 Motives of the management in the organization are selfish and they seek pleasure, and in
this context for ensuring the ethical decision making, organization must ensure that their
motives provides gain to both business and society (Ethics Unwrapped, n.d.).
 Avoiding ethical standards while conducting business operations, and in this context
organization must frame the ethical code of conduct.
 Performance related to the management’s formal and ethical duties must be considered
at the top level.
 Follow principles defined by the ethical theories and fulfill their duties towards the
society.
 Applied al the moral values and ethical codes while taking any decision in the
organization and ensures that decision of the business does not affect the society in
adverse manner.
 Consequences of the decision taken by organization must be assessed in advance and
even before taking the decision (Kilkauer, 2012).
Conclusion:
Above stated facts clearly reflects the ethical standards important while conducting any
activity of the business. Business ethics play most important role in maintaining and enhancing
the reputation of the business. Ethical code of conduct ensures that financial business is
conducting all their operations in legal and ethical manner. In case financial business is
manipulated through the schemes of the money laundering, then business organization is used by
the criminals and business itself becomes the part of the criminal network. This approach of the
financial institutions also damage the reputation of other institutions involved in similar industry,
and also breach the trust of customers.
References:
Dion, M. (2015). "Is money laundering an ethical issue?", Journal of Money Laundering
Control, Vol. 18(4), pp.425-437.

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Ethics Unwrapped. Moral Philosophy. Available at:
http://ethicsunwrapped.utexas.edu/glossary/moral-philosophy. Accessed on 8th June
2018.
ICPAP. Anti-Money Laundering Measures and Business Ethics. Available at:
http://www.icpap.com.pk/frontend/web/attachments/study%20notes/Anti%20Money
%20Laundering%20measures%20and%20Business%20Ethics.pdf. Accessed on 8th June
2018.
Kilkauer, T. (2012). Seven Moral Philosophies of Management. Available at:
https://link.springer.com/chapter/10.1057%2F9781137032218_3. Accessed on 8th June
2018.
Norman, W. Business Ethics. Available at: https://www.hbs.edu/faculty/conferences/2016-
newe/Documents/Norman,%20Business%20Ethics,%20IntEncycEthics.pdf. Accessed on
8th June 2018.
NZherland, (2018). Commonwealth Bank of Australia to pay $759 million over anti-money
laundering and counter-terrorism law breaches. Available at:
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12064241.
Accessed on 8th June 2018.
Reuters, (2018). UPDATE 1-Commonwealth Bank of Australia denies most new claims in
money-laundering case. Available at: https://www.reuters.com/article/australia-cba-
moneylaundering/update-1-commonwealth-bank-of-australia-denies-most-new-claims-in-
money-laundering-case-idUSL4N1QC5Q5. Accessed on 8th June 2018.
The Guardian, (2017). Commonwealth Bank accused of more anti-money laundering law
breaches. Available at:
https://www.theguardian.com/australia-news/2017/dec/14/commonwealth-bank-accused-
of-more-anti-money-laundering-law-breaches. Accessed on 8th June 2018.
Appendix:

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