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The Bank of New Zealand (BNZ), one of the country’s oldest commercial banks, has been chastised by the central bank for money laundering failures.
The Reserve Bank of New Zealand, also known as Te Pūtea Matua, has issued a formal warning against BNZ.
This intervention comes after the retail bank failed to report the correct location for around 50,000 domestic cash transactions in suspicious transaction reports between November 2018 and April 2020.
“This matter highlights the importance of reporting entities testing their AML/CFT compliance systems,” said Christian Hawkesby, the central bank’s deputy governor.
BNZ identified the cause of the failure to be a technical coding error, which led to it providing incorrect location information for these transactions to the Police Financial Intelligence Unit (FIU).
Upon being alerted to the error in its reporting, BNZ promptly remediated the matter, and has fully cooperated with the Reserve Bank during the investigation.
The central bank appreciates that design issues can occur, said Hawkesby. “This reiterates the importance of reporting entities regularly testing and validating the coding for AML/CFT systems to ensure they are correctly designed and implemented.”
“The PTR [suspicious transaction reporting] regime is important for building an intelligence picture across New Zealand’s financial system,” he said.
“Unfortunately, these coding errors compromised the quality of the information held by the FIU. We note that BNZ self-reported this issue to us and has worked hard to remediate the issue and provide the FIU with the corrected information. BNZ’s ongoing cooperation is appreciated.”
The bank was warned via the country’s new enforcement framework, which was implemented by the central bank in May this year.
The enforcement criteria looks at specific considerations that will be worked through and weighed against the available evidence when deciding on the appropriate enforcement response to non-compliance.
The four criteria are: seriousness of conduct; responsiveness; public trust and confidence; and efficacy.
AML-related action by the central bank is rare. The last time it took such a step was in May 2021, when the Reserve Bank opted to file High Court action against community bank TSB after it failed to respond sufficiently to a formal warning.
These were the first civil proceedings taken by the Reserve Bank under the AML/CFT Act.
