The Bank of Queensland has entered into two separate enforceable undertakings with two regulators to improve its compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws and to rectify serious failings in its risk management.
Enforceable undertaking with APRA
APRA said it has agreed to a court enforceable undertaking (CEU) from BoQ, following significant breaches of APRA’s prudential standards in 2022 and 2023 relating to the bank’s liquidity, business continuity planning, and outsourcing arrangements.
In line with the CEU, BoQ will have to prepare a remediation plan on how it will address the underlying issues raised, with a clear timeline for implementation; submit that plan to APRA for approval and address concerns the regulator may have; and appoint an independent reviewer to provide written reports on the implementation of the plan.
BoQ has also been required by APRA to hold an operational risk capital add-on of $50 million that will remain in place until such time as BoQ has delivered the remedial action plan under the CEU to APRA’s satisfaction.
“Although BoQ is financially sound and comfortably above its core capital and liquidity requirements, there are significant gaps in its risk management framework that must be addressed as a priority, particularly in the non-financial risk, anti-money laundering and counter-terrorism financing spaces,” said John Lonsdale (pictured above left), APRA chair.
Enforceable undertaking with AUSTRAC
AUSTRAC, meanwhile, has agreed to a separate enforceable undertaking from BoQ, after a compliance inspection by AUSTRAC identified concerns relating to the adequacy of BoQ’s AML/CTF systems and controls.
The enforceable undertaking with AUSTRAC binds BoQ to an ongoing remedial action plan to improve its AML/CTF program, which AUSTRAC will monitor to ensure it is undertaken within agreed timeframes. The undertaking will also see BoQ engaging an external auditor who will report back to the regulator.
Commenting on the separate regulatory activity by APRA and AUSTRAC, AUSTRAC CEO Nicole Rose (pictured above right) said the two regulators had ensured the other had visibility of the progress of each of their actions against BoQ, as they worked in parallel on their separate investigations.
“The actions undertaken by AUSTRAC and APRA in relation to BoQ highlight whole-of-government efforts to maintain the integrity of Australia’s financial systems,” Rose said.
“Businesses which do not have a strong AML/CTF program in place are vulnerable to exploitation by criminals, which is why AUSTRAC has been working with BoQ to harden their processes. I am pleased with BoQ’s cooperation over the past six months, and their commitment to taking remedial action to ensure they meet their obligations under the AML/CTF Act.”
Copies of the enforceable undertaking are available on the AUSTRAC website and on the APRA website.