Commonwealth Bank has hit back at claims it was still breaching anti-money laundering laws pointing to a recent crackdown on how much cash it will let customers deposit through the bank's ATMs.
After the regulator Austrac this week expanded its case against the bank, CBA on Friday flagged action it had taken in recent months to prevent cash being laundered, with some changes taking place only weeks ago.
Austrac is alleging a mass breach of anti-money laundering laws by CBA, saying it failed to properly monitor or report millions of dollars in suspicious transactions made by criminals through its "intelligent deposit machines," which could accept $20,000 cash deposits.
This week Austrac widened the case to also allege the bank failed to report to Austrac instances of suspected terrorist financing within the required 24 hour deadline.
Austrac also said this week that CBA was still not following the proper procedures to deal with money laundering risks, several months after it launched legal action in August.
"The contravention is ongoing," Austrac's amended statement of claim said.
In a statement to its investors on Friday, CBA said it had made "significant" progress in strengthening its anti-money laundering policies, and would continue to do so.
It launched a risk assessment of its intelligent deposit machines (IDM) in October, and in late November it had introduced a $20,000 limit on how much can cash be deposited into a personal account through an IDM in one day.
Previously, there had not been such a limit, which is still the case with other major banks.
"We restate our position that we take our anti-money laundering and counter-terrorism financing (AML/CTF) obligations extremely seriously," CBA.
The bank said it would respond fully to the latest allegations in its amended defence, but added there had been "misleading" media reports.
CBA's defence, lodged with the court this week the night before Austrac's latest claims, admitted that it should have conducted the risk assessment of its IDMs in January last year, when Austrac raised concerns about laundering risks via ATMs.
The defence said the bank proposed to implement "further controls."
The bank is expected to face a hefty fine over the Austrac case, with some analysts predicting the scandal could cost the bank a sum in the billions of dollars.
Given CBA admitted to many of the allegations this week, bank watchers believe it will try to reach a settlement in the case.
Bell Potter analyst TS Lim noted that CBA comments this week in response to Austrac appeared more "conciliatory," which could point to it settling with Austrac rather fighting the matters in court.
"The fact that CBA is more conciliatory in its approach this time around (in making some admissions and hinting at cooperation) suggests a settlement with AUSTRAC can still be achieved," Mr Lim said.
Macquarie analysts predicted CBA would face a fine of about $1 billion over the Austrac affair, but noted the high difficulty of estimating these costs. They also pushed the case for the bank ultimately reaching a settlement.
"Given the financial and reputation costs associated with these allegations, a quick resolution would be desired," Macquarie analysts said in a note to clients.
Morningstar head of banking research, David Ellis, said the new allegations from Austrac could add to the sense of uncertainty surrounding CBA, which is also on the hunt for a new chief executive to replace Ian Narev.
"The sooner the board and management can work their way through it and focus on the future, the better," Mr Ellis said.
