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Law of Financial Institution and Security: Assignment

   

Added on  2020-03-23

11 Pages2786 Words127 Views
Political Science
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ASSIGNMENT PART 2 1LAW OF FINANCIAL INSTITUTIONS AND SECURITIES: ASSIGNMENT PART 2by [Author(s) name(s)]:BLO3405: Law of Financial Institutions and SecuritiesMarc PosthouwerVictoria UniversityVictoria, Melbourne(Date)
Law of Financial Institution and Security: Assignment_1

ASSIGNMENT PART 2 2Table of ContentsAn Analysis of the Commercial Bank of Australia Money Laundering Case...........................2The Role of AUSTRAC.........................................................................................................2CBA’s Monitoring Systems...................................................................................................4Conclusion..................................................................................................................................4Lamba versus Empire Bank & Esther Guo: A Case Study Analysis on the Bank-CustomerRelationship................................................................................................................................5Legal Obligations Owed to Lamba........................................................................................5Legal Actions Available to Lamba........................................................................................7Conclusion..................................................................................................................................8References..................................................................................................................................9
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ASSIGNMENT PART 2 3An Analysis of the Commercial Bank of Australia Money Laundering CaseThe Commonwealth Bank of Australia (CBA) has recently found itself in legal trouble afterthe Australian Transaction Reports and Analysis Centre (AUSTRAC) brought a case in courtagainst it over breach of anti-money laundering and financial terrorism laws[ CITATIONKna17 \l 2057 ]. The Bank allegedly failed to take necessary action where suspicions arosethat its Intelligent Deposit Machines where being used as a vehicle by drug syndicates tolaunder money. According to the Anti-Money Laundering and Consumer-TerrorismFinancing Act 2006, sections 41 and 43, reporting entities such as banks are required to makereports to the AUSTRAC where they believe suspicious transactions are underway or wheredeposits surpass set thresholds. AUSTRAC alleges that CBA breached these provisions myfailing to or delaying reports on suspicious matters even when they had been alerted ofinvestigations by police[ CITATION Whi17 \l 2057 ]. Further, it is alleged that the bankfailed to adequately assess the risk of their systems against money laundering and financialterrorism thus making them susceptible to misuse[ CITATION Eye10 \l 2057 ]. Thefollowing is an analysis of the issues arising in the case study mentioned above with a focuson the role of AUSTRAC and the liability of CBA with regard to its monitoring systems.The Role of AUSTRACThe AUSTRAC is a statutory authority which takes the role of “Australia’s anti-moneylaundering and counter terrorism financing regulator and specialist financial intelligenceunit”[ CITATION AUS09 \l 2057 ]. Its major role is to ensure and supervise the complianceof financial service providers and other institutions that deal in financial services such as thegambling industry, designated remittance service providers and bullion sellers, with theprovisions of the AMI/CTF Act 2006. By doing so, the body ensures transparency andpromotes integrity within the Australian financial industry. Its duties can be encompassed intwo major roles; the role of a regulator and the role of a financial intelligence unit.
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ASSIGNMENT PART 2 4In its regulatory role, AUSTRAC is tasked with promoting the obligations of the AML/CTFAct by educating and reaching out to relevant organisations to ensure they understand andcomply with the duties bestowed on them. In this role, AUSTRAC collects reports from theaforementioned organisation with regard to their compliance commitment as well asprograms set in place and their effectiveness in preventing money laundering and financeterrorism. It further monitors compliance by setting in place assessment programs and wherenon-compliance is uncovered the body has enforcement powers to address it. The executionof this role is evidenced in the aforementioned case study; AUSTRAC required reports ofsuspicious matters from CBA as per the law. Further, it noted non-compliance and exercisedits enforcement powers to institute a suit against the bank. Additionally, in fulfilment of itsroles, it conducted an assessment of the CBA systems so as to uncover the failure in thesystems with regard to monitoring money laundering and financial terrorism activities.Additionally, in its intelligence role, the organisation is tasked with collecting and analysingfinancial intelligence which it gains through financial transaction reports. Reporting bodiesare required to make reports of their transactions to AUSTRAC, the body analyses thisinformation to determine compliance and highlight areas that require further action to preventmoney laundering and financial terrorism. These analyses aid it in determining reportingbodies that have weak systems or have failed to comply with their statutory obligations in thewar against money laundering. It is through this role that the body was able to highlight thealleged failures in CBA’s systems that led to the laundering of millions of dollars obtainedthrough drug trafficking.CBA’s Monitoring SystemsAs highlighted in the case study, CBA’s liability arises from their failure to report thesuspicious transactions as well as failure to report transactions that were above the setthreshold. According to the opinions provided as well as AUSTRAC’s allegations, the failure
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