High Court penalises TSB Bank

Central Bank welcomes court's decision

High Court penalises TSB Bank

The High Court at Wellington has imposed a civil penalty on TSB Bank Limited (TSB) for breaching the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).

In May 2021, the Reserve Bank of New Zealand (RBNZ) filed a statement of claim supported by a statement of the facts as agreed by TSB and RBNZ and a joint submission on the appropriate penalty.

Now, the High Court has ordered TSB to pay civil penalties totalling $3.5 million after agreeing that it did not comply with the requirements of the AML/CFT Act to:

  • have adequate and effective procedures, policies, and controls for monitoring and managing compliance with its AML/CFT programme;
  • review and maintain its AML/CFT programme;
  • conduct a risk assessment in respect of its real estate operations; and
  • have regard to certain countries it deals with when reviewing its 2017 risk assessment.

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The RBNZ has welcomed the High Court’s decision and confirmed that the court proceedings were an escalated regulatory response to TSB’s ongoing non-compliance following a formal warning issued to the bank in 2016.

The court’s decision provides guidance for future cases and on the appropriate level of discount in cases where breaches are admitted. It noted that TSB’s failure to respond appropriately to a formal warning issued in 2016 was an aggravating factor.

RBNZ deputy governor and general manager of financial stability Geoff Bascand confirmed that TSB has now embarked on a remediation programme.

“The AML/CFT Act came into effect eight years ago, and we expect firms to be aware of, and to comply with, their obligations,” Bascand said.

TSB’s case was the first civil proceeding taken by the RBNZ under the AML/CFT Act.

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