TSB Bank taken to High Court on AML/CFT Act violations

The Reserve Bank of NZ says that TSB had already been warned about its lack of compliance before

TSB Bank taken to High Court on AML/CFT Act violations

TSB Bank has been taken to High Court by the Reserve Bank of New Zealand | Te Pūtea Matua on Thursday due to its lack of compliance with the AML/CFT Act 2009.

The Reserve Bank said that the claim is “an escalated regulatory response to TSB’s non-compliance.” The body said that it had issued a formal warning to TSB back in 2016 over the issue, but as of 2019, TSB’s compliance with the legislation remained “inadequate and ineffective.”

“We are disappointed that TSB did not respond sufficiently to our initial formal warning. We are now obliged to take this High Court procedure,” said Geoff Bascand, deputy governor and general manager of financial stability at the Reserve Bank.

According to a media release, the Reserve Bank seeks to impose pecuniary penalties on TSB related to the following four categories of non-compliance:

  • the absence of adequate and effective procedures, policies and controls for monitoring and managing compliance with its AML/CFT programme
  • the failure to review and maintain its AML/CFT programme
  • the failure to conduct a risk assessment in respect of its realty operations
  • the failure to have regard to certain countries it deals with when reviewing its 2017 risk assessment

Nonetheless, Bascand clarified that TSB was not accused of involvement in money laundering or terrorism financing activities.

The Reserve Bank said that TSB had acknowledged its liability and was cooperating with the body in relation to the claim. Both parties have filed an agreed statement of facts with the High Court.

“TSB acknowledges it has needed to address some areas of AML/CFT compliance and a significant work programme has been in place since 2019 to achieve this,” TSB chair John Kelly said in a statement to Newshub. “TSB is committed to raising the bar in its risk maturity and compliance management and setting a higher standard going forward. We are extremely pleased with the progress that is being made. We still have work to do, but we now have stronger foundations in place which we'll continue to build on.”

According to the chief executive Donna Cooper, TSB has been implementing initiatives to bolster its risk and compliance maturity over the past two years.

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