CBA’s Historic $700M Fine Highlights the Need to Include Money Laundering in the Scope of Banking Royal Commission

On 4 June 2018 CBA reached a settlement with AUSTRAC, agreeing to pay a fine of $700 million plus legal costs over serious and systemic failures to report suspicious deposits, transfers and accounts. CBA admitted to the late filing of 53,506 reports of transactions of $10,000 or more through its “intelligent deposit machines” (IDMs).

 

Watch Transparency International Australia’s CEO Serena Lillywhite comment on the case in ABC News:

Video: ABC News Channel

 

In her interview, Serena Lillywhite says that although the fine falls far short of the theoretical maximum penalty (nearing one trillion dollars), it is the largest ever civil penalty in Australian corporate history and thus sends a strong signal to the banking sector.

 

While it is encouraging that CBA has admitted that it has breached the Anti-Money Laundering and Counter-Terrorist Financing Laws, this case shows that it is still way too easy to launder money in Australia. IDMs (ATMs that instead of giving out withdrawals take in deposits) are not the only weak point in the Australian system – Transparency International’s report Doors Wide Open shows that the Australian real estate market is vulnerable to money laundering through anonymous property purchases.

 

The immense scale of the CBA case and its impact on the public trust in the financial sector highlights an omission in the scope of the Banking Royal Commission – it does not currently cover money laundering. Transparency International Australia recommends extending the scope of the Commission to cover this critical aspect of Australia’s financial integrity system.

 

TIA CEO discussed the CBA case on the World Today, along with Austrac CEO Nicole Rose, and Professor Jason Sharman from Cambridge University. The broadcast is available on the ABC website and below.

 

Media Release: A Federal Integrity and Anti-Corruption Commission on the Horizon

30 January 2018

‘A Federal Integrity and Anti-Corruption Commission on the Horizon’

Transparency International Australia welcomes the pledge today by the Hon Bill Shorten MP, that Labor will establish a federal anti-corruption body if it wins the next election.

Transparency International Australia, is part of a global coalition to fight corruption and promote transparency, integrity and accountability at all levels and across all sectors of society, including in government. This work has included years of campaigning to strengthen Australia’s integrity systems, and repeated calls, to all political parties, to establish a federal ant-corruption agency.

“With growing public distrust of government, and most Australians holding a view there is corruption in federal politics, a well-resourced independent National Integrity Commission to promote integrity and accountability, and to prevent, investigate and expose corruption, is a matter of urgency and has overwhelming public support”, said Transparency International Australia CEO, Serena Lillywhite.

“Australia needs a well-designed, broad-based federal anti-corruption agency, as part of an enhanced multi-agency strategy, to ensure a comprehensive approach to corruption risks beyond the criminal investigation system, and to support stronger parliamentary integrity”, she said.

“Effective institutions to prevent, detect, expose and remedy official corruption are vital at all levels of government.  The absence of an overarching agency of this type at a federal level is a stark deficiency in the eyes of the community”, said Lillywhite.

Transparency International Australia has made clear its view that a federal anti-corruption agency needs to possess the wide range of coercive and investigative powers commonly found in state agencies, including public hearings in proper situations to assist inquiry effectiveness and public interest, essential to the effective operation of an anti-corruption agency.

“Anti-corruption agencies must have the power to make such public findings and recommendations, to ensure that Governments act to remedy corruption, in circumstances where powerful interests may have previously prevented this from occurring, or the Government itself is implicated”, said Anthony Whealy, QC, Chair of Transparency International Australia.

“Mechanisms and resources need to be in place to ensure that when corruption problems are identified, appropriate sanctions or remedies are actually implemented, and in a timely and visible way. For criminal matters, the Commission should be empowered to make findings of fact, and to be referred to a well-resourced and specialized unit within the DPP, for consideration for prosecution”, he said.

The issue of ‘revolving doors’ and ‘conflict of interest’ can no longer be ignored in Australia.

In 2017, Transparency International Australia undertook research into the mining approvals process in Australia. The report, Corruption Risks: Mining Approvals in Australia has identified a high potential for industry influence and state and policy capture in the awarding of mining approvals and related infrastructure projects.

“Greater regulation of political donations, lobbyists and the movement of staff between government and industry, would help reduce risks that can enable corruption to occur. ‘Revolving doors’ and a ‘culture of mateship’ are undermining our national integrity systems and could be tackled by a federal integrity and anti-corruption agency”, said Lillywhite.

A commitment to establish a such an agency is welcome, but as always, the devil is in the detail.

Transparency International Australia and Griffith University’s National Integrity Systems Assessment, will provide the rigorous evidence base to illuminate a detailed design for a federal integrity and anti-corruption agency. At the end of the day, the independence, resources, and investigative powers of such an agency, will be its make or break.

For further information please contact:

Serena Lillywhite, CEO, Transparency International Australia

0403 436 896

serenalillywhite@transparency.org.au

See Transparency International Australia’s work with Griffith University on the National Integrity Systems Assessment

End.

 

Media Release: Rising Corruption Concern Drives Support for Federal Integrity Body

20 August 2018

Global Corruption Barometer Survey Results

‘Rising Corruption Concern Drives Support for Federal Integrity Body’

Australians’ trust in government has continued to slide, driven by growing concerns about corruption at the federal level, according to a special Global Corruption Barometer survey conducted by Griffith University and Transparency International Australia.

The results also show strong support for creation of a new federal anti-corruption body, with two-thirds (67%) supporting the idea, especially in Victoria, NSW and South Australia – with those ‘strongly supporting’ the idea outstripping those who strongly oppose it by 4 to 1.

Combined with Griffith University’s Australian Constitutional Values Survey, the in-person telephone poll of 2,218 adults, conducted in May-June, provides the first measure since 2012 of the growing impact of corruption on citizens’ trust and confidence in government. The survey shows:

  • Trust & confidence in all levels of government fell in the last year, to 46% for federal and state levels and 51% for local government nationally
  • Continued low levels of experienced bribery (less than 2%), but high concerns about officials or politicians using their position to benefit themselves or family (62%) or favouring businesses and individuals in return for political donations or support (56%)
  • A 9 point increase since 2016 in perceptions that federal members of parliament are corrupt (85% at least ‘some’ corrupt, 18% ‘most/all’ corrupt) – placing them on par with state parliamentarians and worse than local officials.

Project leader Professor A J Brown, of Griffith University’s Centre for Governance & Public Policy, said the results provide both a warning and an opportunity for Australian governments.

“We now see a stronger correlation between trust and action against corruption.”

“Well over a third of citizens’ total trust and confidence is now explained by whether they feel the government is doing a ‘good job in fighting corruption’ (37% at the federal level, 25% state).

“Continued slippage in the perceived integrity of federal officials clearly has a disproportionate effect on overall trust and confidence, nationwide.”

Federal anti-corruption agency support

The survey is the first to test support for a federal anti-corruption body by also presenting respondents with a counter proposition – but still records strong support across the community, especially among respondents who have ever worked for the federal government itself.

Two-thirds of Australians (67%) support the idea, with most of these (43%) expressing strong support, against only 10% expressing strong opposition.

Respondents were also told: “Other people say a new agency isn’t needed because existing bodies like the Australian Federal Police are already adequate to deal with federal corruption”, before being asked to express a view.

Support is slightly higher among women (70%) than men (65%), and among citizens of Victoria (73%), NSW (69%) and South Australia (68%), and lower among those over the age of 65 (60%) but otherwise spread broadly across the community including all education levels.

Among the 1,011 respondents who had worked in government, the 245 respondents who had ever worked in the federal government recorded the highest level of strong support for a new federal agency – 54% against the national average of 42%.

The same group were marginally less likely than other respondents to rate corruption in government as a big or very big problem (50% against the national average of 57%), but were:

  • the least likely to say that the “task of fighting corruption” was currently being handled well at the federal level (35% against the national average of 48%)
  • more likely than other respondents to have witnessed or suspected an official or politician of making a decision in favour of a business or individual who gave them political donations or support in the last 12 months (68% against national average of 56%)

Undue influence a major concern

Serena Lillywhite, CEO of Transparency International Australia, said the results “firmly show that the risk of undue influence and decisions that benefit business and powerful individuals is real, and driving increasing corruption concerns”.

“For 56% of respondents – equating to over 10.2 million Australians – to say they had personally witnessed or suspected favouritism by a politician or official in exchange for donations or support is nothing less than shocking.”

“This snapshot also shows the case for a strong, comprehensive federal anti-corruption agency is well understood by those within government, not just based on the fears of outsiders.”

“Improved transparency and strengthened oversight of government decision making, including the regulation of lobbyists, is also long overdue,” Ms Lillywhite concluded.

New options paper to be released – Canberra symposium 21st August

The Corruption Barometer results coincide with Australia’s Public Integrity Institutions: Strengths, Weaknesses, Gaps, being held in Canberra on Tuesday 21 August. A major new paper, A National Integrity Commission: Options for Australia, will be released at the symposium.

The survey and symposium form part of the Australian Research Council project Strengthening Australia’s national integrity system: priorities for reform, led by Griffith University and Transparency International Australia, conducting Australia’s second National Integrity System Assessment.

FOR MORE INFORMATION:

See the full media and data release here.

Professor A J Brown, Griffith University – 0414 782 331
Serena Lillywhite, TI Australia – 0403 436 896

End.

 

Corruption and Real Estate in Australia, Canada, the UK and the US

A Transparency International report released on 30 March 2017 said that the governments of Australia, Canada, the UK and the US need to close glaring legal loopholes to prevent the corrupt elite from laundering the proceeds of grand corruption in their local real estate markets.

The impact of overseas investment in Australia’s real estate is not limited to elevating home prices.  There is clear evidence that such investment in Australian property is also an easy and convenient way to hide hundreds of millions of dollars from criminal investigators, tax authorities or others tracking criminal behaviour and the proceeds of crime.

In a report released today Doors Wide Open Corruption and Real Estate in Four Key Markets, in advance of the Anniversary of the release of the Panama Papers, Transparency International calls on the Governments of Australia, Canada, UK and USA to close the legal loopholes to prevent the corrupt elite from laundering the proceeds of grand corruption in their local real estate markets.

READ MORE in the TI Australia press release

TI Australia supports the creation of a central new corporate register

TI Australia supports the creation of a central new corporate register to record beneficial ownership information. It submits that:

  • The new corporate register should be publicly available (open access) to increase opportunities for the public to verify and provide information and that the beneficial ownership information should be free of charge.
  • The central new corporate register could be maintained by either AUSTRAC or ASIC due to those agencies’ ability to collect information and to enforce against companies that fail to report information.
  • If there is any difficulty with defining the “beneficial owner” of a company, the definition of “beneficial owner” from Australia’s anti-money laundering framework should be preferred.

TI Australia acknowledges that there may be obstacles in implementing the central new corporate register including ensuring that trusts would duly report beneficial ownership information and ensuring that accurate information is collected and verified.

However, in light of the need for greater transparency, Australia cannot, nor should it, afford to wait for the perfect system before the central new corporate register is implemented. There is value and a need to have a central new corporate register of beneficial ownership in Australia – similar to the United Kingdom’s register of ‘People with Significant Control’ – such a register could be implemented in progressive stages ensuring that the system would continuously improve.

Taking these first steps to implement a central new corporate register would ensure that Australia complies with its international commitments to increase transparency and could have a beneficial flow on effect to minimising corruption and tackling illicit financial activities.

Click here to read TI Australia’s Submission on Increasing transparency of the beneficial ownership of companies.

National Integrity Summit opens the discussion on reform

TI Australia’s first biennial conference, National Integrity 2017, wrapped up on Friday 17 March. It brought together 160 government, business and civil society delegates from all corners of Australia, including senior legal figures, heads of integrity agencies, federal, state and local parliamentarians, community groups, corporate leaders and individual TI Australia members.

Our thanks to everyone for two days of stimulating discussion on all we value, and all we need to strengthen in Australia’s integrity systems!

Read more here including a new discussion paper: ‘A Federal Anti-Corruption Agency for Australia?’ arising from the conference. Subscribe to the TI Australia mailing list for more updates on our next National Integrity System assessment and future events, including the 2019 conference.

Queensland Integrity Commissioner, Richard Bingham, ANZ Banking Group’s Guy Boyd, the Crime & Corruption Commission’s Dr Rebecca Denning and Professor Janet Ransley of Griffith University talk corruption prevention at National Integrity 2017.

900 million people in Asia Pacific are paying bribes – a huge challenge for Australian business

The most recent TI Australia media release notes that:

Approximately 900 million — or just over one in four — people living in 16 countries in Asia Pacific, including some of its biggest economies are estimated to have paid a bribe to access public services, according to a new public opinion poll from the anti-corruption movement Transparency International.

Transparency International spoke to nearly 22,000 people about their recent experiences with corruption for People and Corruption: Asia Pacific, part of the Global Corruption Barometer (GCB) series.

Click here to read more

Australians lead worldwide support for political donations reform

Transparency International’s Global Corruption Barometer (GCB), the world’s largest survey on public experience of corruption, has revealed that Australians’ biggest concerns are about secret backroom deals between business and government – and that they’re the strongest proponents of banning corporate political donations. Click here for detailed GCB results for Australia.

These clear-cut results from Transparency International’s 2016-2017 Global Corruption Barometer come the day Queensland’s new online donation disclosure system went live – an Australian first – and two weeks ahead of the National Integrity 2017 Conference.

Read detailed commentary in TI Australia’s media release.