The prudential regulator has announced an inquiry into the Commonwealth Bank which has been charged with perpetrating over 53,700 contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
The Australian Prudential Regulation Authority said it will set up an independent panel.
It will take six months to prepare a report which will be made public.
APRA said the inquiry would identify any shortcomings in the governance, culture and accountability frameworks and practices within CBA.
It would make recommendations on how these issues should be “promptly and adequately addressed.”
“It would include, at a minimum, considering whether the group’s organisational structure, governance, financial objectives, remuneration and accountability frameworks are conflicting with sound risk management and compliance outcomes,” APRA said in its statement.
The CBA will pay the costs of the inquiry.
In a statement to the market, CBA chair Catherine Livingstone acknowledged that “events over recent years have weakened the community’s trust in us.”
“We have been working hard to strengthen trust, and will continue to do so,” Ms Livingstone said.
“We welcome this opportunity for independent parties to review the work we have already undertaken and advise on what more we can do. APRA’s oversight of this inquiry will ensure the independence and transparency needed to reassure all our stakeholders.”
Ratings agency S&P Global said the review might have an impact on the CBA’s ratings.
“We consider that the bank’s credit profile is likely to weaken if there were any material adverse findings by this inquiry or any financial penalties, potential material damage to the bank’s reputation and franchise, or any indications of weaknesses in its governance and risk management framework,” S&P Global said.
“These pressures on the ratings on CBA are in addition to those incorporated in the negative outlook on CBA and other major Australian banks reflecting our view of a potential reduction in the Australian government’s support for the systemically important banks.”