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Speaker 1: Right now. It's twenty five away from seven now ASB

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Speaker 1: is facing a fine of around six million dollars for

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Speaker 1: breaching anti money laundering rules. This is called the attention

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Speaker 1: of The Herald's Wellington Business editor, Genative Trainer, who's with

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Speaker 1: us Elo gene Hi Heather. Quite a remarkable thing that

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Speaker 1: this has happened to ASB, given that they surely would

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Speaker 1: have all kinds of safeguards and places, wouldn't they.

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Speaker 2: Well, you'd think so because much has been made of

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Speaker 2: these anti money laundering and countering the financing of terrorism laws.

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Speaker 2: So New Zealand is part of an international regime. Basically,

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Speaker 2: banks need to make sure that any money they take

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Speaker 2: in they need to know exactly where that's coming from

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Speaker 2: because they can't be sort of complicit in money laundering

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Speaker 2: or you know, it could be like the drug trade

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Speaker 2: or going again, transferring money that's against sanctions. So you know,

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Speaker 2: banks have kind of the spotlight has been on banks

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Speaker 2: for some years. It's been so much so that they've

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Speaker 2: sort of blanket de risked, that's what the industry calls it,

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Speaker 2: where they've said we're not doing any business with money

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Speaker 2: remitters or nothing to do with cryptocurrency because of these,

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Speaker 2: you know, because we have to comply with these anti

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Speaker 2: money laundering rules. But as it's turned out, the Reserve

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Speaker 2: Bank took ASP to court, ASP acknowledges you know that

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Speaker 2: it's done the wrong thing by law because it hasn't

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Speaker 2: had the right systems in place since at least twenty nineteen. Wow,

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Speaker 2: So you know, it's a rafter things that didn't have

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Speaker 2: the right compliance program, didn't do sufficient due diligence, didn't

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Speaker 2: terminate business relationships as required, and the money that went

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Speaker 2: through ASP that wasn't properly checked was you know, transactions

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Speaker 2: worth about ten billion dollars.

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Speaker 1: Why do we know why they were so sloppy.

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Speaker 2: Well, it's a good question. I suppose these systems are

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Speaker 2: expensive and cumbersome. The industry will say that the act

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Speaker 2: is not fit for purpose, that it's too clunky, and

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Speaker 2: that it actually you know, doesn't support the economy because

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Speaker 2: you hear from businesses who say they have to jump

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Speaker 2: through so many hoops in order to get a bank

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Speaker 2: to bank them. So that's what their argument would be.

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Speaker 2: The thing that struck me with this is that the

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Speaker 2: penalty six point seven million dollars isn't a lot of

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Speaker 2: money for a bank if you think of breaches that

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Speaker 2: go all the way back to twenty nineteen, and you know,

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Speaker 2: under an act that is supposedly so heavy handed that

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Speaker 2: it's you know, caused banks to stop banking a whole

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Speaker 2: bunch of businesses, including sort of entire sectors. So I

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Speaker 2: think that the question this raises as well, is the

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Speaker 2: Act actually entirely fit for purpose? And are these penalties

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Speaker 2: large enough to encourage banks to put the right systems

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Speaker 2: in place, because you know, seven, yeah, six million dollars

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Speaker 2: is not much, not much money for a bank.

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Speaker 1: Quite yeah, you're almost not saying this is the case,

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Speaker 1: but you'd almost be incentiviized to just take the fine

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Speaker 1: so you don't have to actually do all the red tape.

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Speaker 1: I thought that there was some sort of like I

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Speaker 1: might be imagining it, but I thought that there was

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Speaker 1: some sort of moves afoot to maybe have a look

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Speaker 1: at the AML and deal with it.

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Speaker 2: Am I am, I right, You're right, there are moves afoot,

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Speaker 2: and I'm not sure exactly what that would mean for banks.

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Speaker 2: I think the spotlight has been on banks most heavily,

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Speaker 2: so under the new rules, if you're an accountant or

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Speaker 2: lawyer or real estate agent. You know, you have to

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Speaker 2: make sure that your client's money is clean basically, But

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Speaker 2: where the rubber really hits the road is where the bank,

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Speaker 2: because the bank transacts the money. So my belief is,

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Speaker 2: even if the rules are made a bit easier, the

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Speaker 2: owners is still largely on the bank. So I guess

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Speaker 2: for the bank to end up in court is quite

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Speaker 2: a big deal. This has only ever happened as well

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Speaker 2: with TSB. It found itself in court. I think it

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Speaker 2: was fined about three million dollars for its breaches. It's

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Speaker 2: a bit more money. TSB is a smaller bank, but

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Speaker 2: I think I'm still trying to get my head around

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Speaker 2: why banks are so risk averse when the penalty is

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Speaker 2: so low. Yes, And the difficulty with this, Heather, is

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Speaker 2: to get anyone to talk to you about it is

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Speaker 2: hard because all the lawyers in the country, whoever real

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Speaker 2: expertise in this area, have clients who are banks. So

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Speaker 2: it's an issue that the people in the know are

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Speaker 2: very kind of hesitant to talk about it.

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Speaker 1: I love that, you know, Thank you very muche. When

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Speaker 1: we may never find out. Jannetib Traini The Herald's Wellington

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Speaker 1: Business editor. For more from Heather Duplessy Allen Drive, listen

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Speaker 1: live to news talks that'd be from four pm weekdays,

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Speaker 1: or follow the podcast on iHeartRadio