NZ's second AML civil action in six months puts all banks on notice
The Reserve Bank has taken The Co-operative Bank to the Wellington High Court over systemic failures in its anti-money laundering and countering financing of terrorism programme, in the second such civil action the regulator has filed in six months.
The proceedings, filed under the AML/CFT Act 2009, relate to failures stemming from at least 2020 across three core areas: transaction monitoring rules that were not operating correctly, inadequate assurance testing of account and transaction monitoring, and insufficient record-keeping.
As a result, the bank failed to identify higher-risk transactions and customers, carry out timely enhanced due diligence, and maintain records as required by law.
The Co-operative Bank has admitted liability for all three causes of action. The parties have jointly recommended a penalty of $1.425 million, though the final determination rests with the court.
A pattern of systemic failure
RBNZ acting assistant governor of financial stability Angus McGregor said the case was part of a broader enforcement signal to the sector.
"This action again reinforces that prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable," McGregor said.
He was direct about what the regulator expects from all banks.
"The RBNZ expects all banks to have appropriate systems and resources in place to actively monitor customer accounts and transactions, supported by fit for purpose testing and assurance to fully comply with the requirements of the act,” McGregor said. “These measures are essential to identify and mitigate potential money laundering or terrorism financing risks in a timely manner."
It is not alleged that The Co-operative Bank was itself involved in money laundering or the financing of terrorism — the action concerns the adequacy of the bank's compliance systems, not its conduct as a participant in financial crime.
The first action in that six-month period was filed against ASB Bank in December — also for AML/CFT failures dating back to at least 2019 — with ASB admitting liability for all seven causes of action and a jointly recommended penalty of $6.73 million.
What changes from July 2026
The case also marks one of the final enforcement actions under the RBNZ's watch as AML/CFT supervisor.
From 1 July, the Department of Internal Affairs will become the single AML/CFT supervisor for all reporting entities in New Zealand — a consolidation of oversight currently split across the RBNZ, the DIA, and the Financial Markets Authority. The DIA has confirmed it is supportive of this action and will take carriage of the proceeding from that date.
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