If a court approves the fine, it will be the largest civil penalty in Australian corporate history. The bank has also said it would pay additional legal costs of A$2.5m for the investigation, which was carried out by the financial intelligence agency, the Australian Transaction Reports and Analysis Centre (AUSTRAC).

This found that CBA had failed to provide threshold transaction reports for cash transactions of over $10,000 made through its intelligent deposit machines (IDMs) by the required deadline on 53,506 occasions between November 2012 to September 2015, representing a total value of about A$625m.  Such reports should be filed within ten days.

For a period of three years, the bank did not comply with the requirements of its AML/CTF programme relating to monitoring transactions on 778,370 accounts, with AUSTRAC stating CBA ‘failed to report suspicious matters on time, or at all, involving transactions in the tens of millions of dollars’.

Even after it became aware of suspected money laundering or structuring on CBA accounts the bank did not monitor its customers to mitigate and manage money laundering and counter terrorist financing risks. It also admitted that 149 suspicious matter reports were filed late, or not filed at all.

In addition, the bank breached its obligations to perform checks on 80 suspicious customers and transaction monitoring did not operate as intended on a number of accounts between October 2012 and October 2015.

AUSTRAC’s CEO, Nicole Rose, said: ‘We know that businesses are the first line of defence in protecting the community and our financial system from criminal abuse, and it is critical for AML/CTF compliance and risk management to be embedded in business strategy and practices.

‘I hope this result alerts the financial sector to the consequences of poor compliance, and reinforces that businesses need to take their obligations seriously.’

Matt Comyn, CBA’s CEO, said: ‘While not deliberate, we fully appreciate the seriousness of the mistakes we made.

‘To date we have spent over A$400m on systems, processes and people relating to AML/CTF compliance and will continue to prioritise investment in this area.

‘We have changed senior leadership in the key roles overseeing financial crimes compliance supported by significant resources and clear accountabilities.’

CBA provided for an estimated penalty of A$375m in the half year ending 31 December 2017 at which time the bank noted the proceedings were complex and ongoing.

The federal court has to confirm the agreement between CBA and AUSTRAC and the ultimate penalty may be higher or lower than the amount provided for.  CBA says it will recognise a A$700m provision in its financial statements for the full year ending 30 June 2018 which will be announced on 8 August.

Agreement between CBA and AUSTRAC is here.

Report by Pat Sweet