University Management Project: Ethical Practices and Bank Analysis

This project analyzes the ethical implications of the Commonwealth Bank's Transactions Monitoring Law violations. It examines the importance of ethical business practices, the impact of unethical actions on corporate image, and the consequences of non-compliance with regulations. The project delves into the bank's failures in monitoring transactions and reporting suspicious activities, highlighting the negligence that led to significant financial and reputational damage. The analysis incorporates ethical theories such as Kantianism, Individualism, and Utilitarianism to evaluate the bank's actions. Furthermore, the project assesses the effects of the case on stakeholders and offers recommendations for improvement, including insights into the author's future studies in management and ethics. The project underscores the significance of ethical conduct in maintaining customer loyalty and a positive corporate image within the competitive business landscape.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Executive Summary:..................................................................................................................2
Background of the business group / topic being studied:..........................................................2
Issues / Problems that being analysed:.......................................................................................4
Detailed analysis of the identified issues by referring to disciplinary knowledge and skills
learnt from your degree:.............................................................................................................5
Recommend solution / Suggestions:..........................................................................................9
Plan of your career or future study:..........................................................................................10
References:...............................................................................................................................11

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Executive Summary:
The relation of the ethical business practices with the development of the corporate
image is significantly visible in the modern world of trade business. Majority of the business
groups operating in the modern world of business are facing the heat of the business
competition. Under such situation, the effective achievement of the customer loyalty or the
retention of the clients is seen to be one of the prime concern for the business groups. Having
said that, the reputation of the business groups and the corporate image is one of the major
factor that influences the clients’ purchase intention. The corporate image has the ability to
convince and ensure the belief of the clients which will ease out the difficulty of the business
groups in retaining their clients. Hence, the ability of the business groups in conducting the
ethical actions is crucial for their success. On the other hand, the unethical and
inappropriate business practices are perceived to be major menace for the business groups as
it has the potential to affect the success of the business groups. The unethical actions of the
business groups has the capability to provide reputational crisis to the business groups along
with financial penalizations. The detrimental impact of the same on the business practices of
the business groups is significant. The paper evaluates one such business case. The paper
analyses the Commonwealth Bank’s Transactions Monitoring Law violations. The paper
assesses the case to identify what went wrong for the business group and figured out that the
negligence of the business group to be the main problem. The paper analyses the case in
context of Kantianism, Individualism and Utilitarianism theories. In addition to this, it
assesses the effects of the case on the stakeholders of the business group. In addition to this,
the paper provides a set of suggestions for the business group along with the information
regarding my future studies.

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Background of the business group / topic being studied:
The significance of incorporating the business ethics in the business organizations
operating in the modern world of business, is perceived to increase in a notable manner. With
the intensified degree of business rivalry, the business groups are facing the need of
conducting a sustainable business and under such situation, the importance of establishing a
fair corporate image is seen to be enhanced for the business groups (Crane et al. 2019).
Having said that, the practice of the ethical and socially responsible actions is considered to
be crucial for the business groups in the improvement of their brand image. Thinking of the
business competition, it becomes important for the business groups to improve their brand
image which has the capability to influence the purchase intention of the clients and under
such situation, it becomes a crucial tactics for the customer retention and for developing the
much required customer loyalty (Trevino and Nelson 2016). Hence the importance of the
ethical and valuable practices in various business industries is pretty prominent. Along with
this, the incorporation of the business ethics and the maintenance of the social responsibility
have the capability to develop the much required accountability amongst the staffs of the
business groups. In addition to this, the ethical practice has the capability to manage the
concerns of the organizations regarding the reputational crisis and monetary penalization in
an efficient manner.
The chosen organization for portraying the importance of ethical, valuable and
socially responsible practices is Commonwealth Bank. The organization is one of the leading
business groups operating in the banking services industry of Australia. The organization
operates as a public business group from the year 1991, however, it started its actions as a
government bank from the year 1911. The business group is currently having more than 1100
branches along with 4300 ATMs across the world (Commbank.com.au. 2019). The business
group is currently headquartered in Darling Harbour of Sydney. The business group is led by

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an efficient management team which includes the Chairman of the business group, Catherine
Livingstone AO along with the Chief Executive Officer and the Managing Director of the
business group, Matt Comyn (Commbank.com.au. 2019). Along with this, the business group
is able to employ more than 51800 numbers of staffs (Commbank.com.au. 2019). The
successful achievement of the operational actions by the staffs and the visionary leadership of
the staffs have played an important part in improving the financial stability of the business
group which is pretty prominent with the ability of the business group in increasing their
revenue to 26.005 billion Australian dollars in the year 2017 (Commbank.com.au. 2019).
Along with this, the business group is able to generate a net income of 9.881 billion
Australian dollars in 2017 (Commbank.com.au. 2019). Hence the significant ability of the
business group in conducting a money-making business in the industry is pretty prominent.
However the business group is seen to face considerable amount of criticism in the year 2017
with the news of Transactions Monitoring Law Violations (Abc.net.au 2019). This forced the
business group to face considerable amount of criticism in the industry which had the
potential to influence the clients in a negative manner.
Number of Employees Revenue in 2017 Net income in 2017
51800 26.005 billion Australian
dollars
9.881 billion Australian
dollars
Issues / Problems that being analysed:
Considering the case of the Commonwealth Bank, it is visible that the business group
was facing considerable number of issues in their business actions. The business group,
through its business actions, violated the Transactions Monitoring Law in the year 2017
(Afr.com 2019). The Australian government and the other governmental agencies require the
banks and the financial institutions to monitor the transactions to ensure that the cash flowing

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through their organizations is not linked to any sort of criminal actions. In other words, the
business groups are responsible to make sure that they are not allowing any criminal
syndicates to use their systems and infrastructure for laundering their money which is
achieved with the conduct of unethical actions. However, the chosen organization was
perceived to be an utter failure. In the year 2012, the business group was seen to roll out their
Intelligent Deposit Machines and the business group introduced the mentioned machine
without any sort of prior investigations and the risk assessments (Austrac.gov.au. 2019). The
compliance of the business group with the banking legislations of the nation was pretty
significant in stating the necessity of the proactive and early risk assessment which was not
conducted by the organization. As a result, the criminal syndicates were perceived to utilize
the IDMs with the help of the anonymous bank accounts (Theconversation.com 2019). Five
criminal associations were reported to decontaminate their money with the help of the bank
accounts, fake combinations and offshore transferring schemes (Austrac.gov.au. 2019).
In 2015, the business group was reported to conduct their preliminary investigation
for the first time where it was found that approximately nine billion dollars were transferred
using the bank accounts of the mentioned business group in an unethical manner (Hutchens
2019). Other than this, the banking legislations of the nation were perceived to highlight the
necessity of evaluating the flow of cash through the systems of the bank and report any sort
of unethical transfer of money. However, the business group completely failed in this and
was negligent about the same as well. From October 2012 to late part of 2016, the business
group failed to monitor the transaction of 778370 accounts (Austrac.gov.au. 2019). Along
with that, Australia's Transaction Reports and Analysis Centre is perceived
to be efficient enough in highlighting the fact that the business group was
unable to report on suspicious transactions on 53506 transactions from
November 2012 to September 2015 (Austrac.gov.au. 2019). The sum of the

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mistake was as massive as 625 million dollars (Austrac.gov.au. 2019). Hence it
is evident that the business group was tremendously negligent in their
approach, however, some of the critics claimed it to be an act of
intentional negligence shown by the bank authority.
Failure in monitoring
transactions
Suspicious transactions not
reported
Monetary Cost
778370 Accounts 53506 625 million dollars
778370
53506 625
Monitoring Violation Statistics
Failure in monitoring transactions (Accounts) Suspicious transactions not reported
Monetary Cost (million dollar)
Detailed analysis of the identified issues by referring to disciplinary
knowledge and skills learnt from your degree:
Considering the impact of the business reputation on the business actions of any
organization operating in the service industry, it is evident that the success of the business
groups with their products and services is largely dependent on the ability of the business
group in influencing the purchase intention of their clients. Hoffman, Frederick and Schwartz

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(2014) claimed that, as the reputation of the business groups is one of the strong influencers,
the necessity faced by the business groups towards the management of their reputation is
significantly prominent. Under such situation, majority of the business groups are perceived
to be more inclined towards the management of the business ethics in the business actions of
their staffs. From the study of the human resource management, I am able to understand the
importance of the ethical actions inside the organizations. Along with this, the study helped
me in understanding the consequences that the unethical business practices in the
organizational context, is associated with. From various real life examples of the unethical
business practices, I am able to understand the impact of the unethical actions in providing
significant amount of reputational crisis to the business groups. Along with that,, the cases of
such unlawful business practices from the part of the business groups have the capability to
place the organizations in perfect position for facing monetary penalizations (DesJardins and
McCall 2014). Apart from this, the study of the human resource management helped me in a
significant manner in the application of various ethics elated theories for the identification of
the unethical and ethical business practices in the organisational context. The mentioned
study helped in gaining important insights regarding the Utilitarianism, Kantianism and
Individualism theory.
With a precise knowledge of these theories, I am able to analyse the unethical
business practices conducted by the selected business group. Thinking of the Friedman’s
Individualism theory which is also recognized as Economic Theory, the
business practices that are within the confinement of the rules and
regulations, are recognized as the ethical actions (Jones 2014). The material
values that are generated with the application of the business practices,
are considered to be secondary in the approach as the primary concern is
seen to be the ethical consideration associated with the business

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practices which means whether a certain business practice conducted by
a business group is earning profit or not is invalid and the moment the
particular business practice violates the confinement of rule, it is expected
to be considered as unethical business practice. On the other hand, the
Kantian ethics or the Kantianism is perceived to be focused in evaluating
the base of the business practice. Thinking of the mentioned ethical
viewpoint, the business practices that are coming from the goodwill, are
expected to be recognized as the ethical actions. It is evident that the
goodwill is the rational part of the human feelings which influence the
individuals in conducting their actions for the right reasons. Hay (2013)
claimed that the determination of the fact that whether an action is
coming from goodwill or not is pretty unique. Hay (2013) further added that
the recognition of an action being based on the goodwill, is certainly
based on the fact that whether the action is right action and whether it is
motivated for the right cause. With a precise consideration towards the
Formula of Humanity, it is evident that the business practice that can be
universalized, is expected to be recognized as the ethical actions.
Considering the Utilitarianism viewpoint of ethics, the actions that are to be
recognized as the ethical, are expected to maximize the happiness of the people associated
with the action. The mentioned viewpoint of ethics is significantly dissimilar to that of the
Kantianism as the actions that are recognized as ethical with the application of the theory are
not necessarily the right actions based on the right objectives. With the Utilitarianism theory
of ethics, the main concern is whether the action dissatisfies the individuals associated with it
(Mill 2016). Considering the business perspectives, a certain business action will be
recognized as ethical if the action is able to satisfy the stakeholders associated such as the

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clients, community government, staffs, shareholders along with the suppliers, with the
business actions.
Application of the theories in the selected case:
With a detailed focus on the individualism theory, it is visible that the business
actions of the business group were not confined within the rule and that is evident with the
negligence of the business group in evaluating their transactions. The business group was
perceived to violate the section 82 of the Anti-Money Laundering and Counter-Terrorism
Financing Act of 2006 for approximately 9 times. Along with that, the business group was
perceived to violate the section 43 of the mentioned article for approximately 53,506
occasions. Australia's Transaction Reports and Analysis Centre claimed that the list of rule
violations conducted from the part of the business group went on and on, however, the senior
management and the relevant authorities of the bank kept silent. Having said that, the bank’s
negligence towards evaluating the case was able to increase their profit and that is visible
with the average net profit margin of 34%. Hence, it is evident that the transaction charges
from the transactions that were not investigated by the business group resulted in such
significant rise of the profit for the business group. With a precise understanding of the fact, it
becomes evident that the business group might intentionally kept themselves away from the
preliminary risk assessments for the IDMs which enabled them to generate such significant
profit. As the actions of the mentioned business group in developing such massive profit were
not in accordance to the banking legislations of the nation, it provided undue advantage to the
mentioned business group. Hence, it requires to be considered as the unethical business
practices conducted from the part of the business group.
Considering the Utilitarianism theory of ethics, it is understandable that the ethical
actions in accordance to the mentioned theory are the ones that have the capability to increase

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the happiness of the stakeholders of the business group. However, the bsuiness actions of the
business group were perceived to be a major point of concern for majority orf the
stakeholders of the business group. As a result of the controversy, the stock prices of the
business group decreased by 14% and that is consiodered to be one of the largest declines in
the history of the business group (Commbank.com.au. 2019). Hence the shareholders and
owners of the business group faced the heat. Along with that,, the involvement of the senior
management and a section of the staffs in the controversy was massive hit on the reputation
of the staffs of the business group. In addition to this, the several media organizations
highlighted the case at the global and national stage and that reduced the reputation of the
business group in being an efficient employer (Cohn, Fehr and Maréchal 2014). Other than
this, the clients of the business group were seen to be affected by the controversy in a
significant manner and that was evident with the fact that the value of the stock prices of the
business group was decreasing in a rapid manner. Hence, the clients of the business group
were perceived to be significantly concerned and that had the potential to reduce the purchase
intention of the clients. Other than this, the criminal investigation and the charges reduced the
business reputation of the business group and dissatisfied the national governmenbt and the
governmental agencies.
Considering the Kantianism theory of ethics where the main basis for certifying any
action as right or wrong is the motivation behind the actions, it is evident that the business
group had primarlily no intention of investigating the source of the money. It is
understandable that the the transaction charges and the other service charges imposed on the
transactions are impoortant means of profit generation for the business group. However, the
business group were negligent in evaluating the process in which the money was made and
that restricted it in reporting the suspicious actions to the relevant authorities of the
government such as AUSTRAC. Hence the business group’s sole objective was to generate

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money and it lacked the much required motive to find put the process in which the money
was made (Ward 2013). Hence, the buisness actions of the business group are in need to be
considered as unethical as per the viewpoint of Kantian ethics.
Recommend solution / Suggestions:
With a detailed emphasis on the scenario and the unethical business actions conducted
by the selected organization, the success of the business group in improving their business is
largely dependent on the effective implementation of the below mentioned suggestions.
 The business group is in need to improve their approach in implementing the
necessary risk assessments for the products and services that they provide to their
clients.
 The business group requires to align their business practices with the banking
legislations of the Australia's Transaction Reports and Analysis Centre as
that will be significant for their success in managing the ethical and legal business
actions.
 One of the important recommendation for the business group will be to implement an
integrated marketing communication actions to make sure that they communicate with
their most important stakeholders that are the clients. The main objective of the IMC
will be to communicate the actions and the actions that the business group has
undertaken to resolve such a significant issue. Along with that,, the implementation of
the IMC is important for the success of the business group in convincing the clients
regarding the necessary adjustments that the business group has achieved.
Plan of your career or future study:
With a detailed focus on my job role as the human resource manager, I would like to
improve my knowledge of the business ethics and the incorporation of the same in the