(31 May 2023 – Australia) Bank of Queensland (BoQ) has entered multiple voluntary enforceable undertakings (EU) for issues with its anti-money laundering (AML), counter-terrorism financing detection processes and weaknesses in its risk management practices.
BoQ announced two EUs, one with the Australian Prudential Regulatory Authority (APRA) in relation to remedying deficiencies in its operational resilience, risk culture and governance and another with the government financial intelligence agency the Australian Transaction Reports and Analysis Centre (AUSTRAC).
APRA found the bank had breached several of its strict prudential standards in 2022 and 2023, and followed APRA’s prudential review into BoQ’s operational risk, compliance and risk culture. The group will now submit a remedial action plan to address underlying weaknesses in risk management practices, controls, systems, governance and risk culture.
The enforceable undertakings will be the first major challenge the bank’s new managing director and CEO, Patrick Allaway, will face since taking over leadership of the bank.
“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” stated APRA Chair John Lonsdale.
“I have communicated APRA’s concerns directly to the BOQ Chair and CEO. They understand what we require, have taken important steps towards being able to deliver that in recent months, and we look forward to receiving and approving a final, comprehensive remediation plan that will address the underlying issues raised”
“The bank remains committed to the remediation noted above and the commitments entered into with APRA and AUSTRAC will serve as a platform to continue the work commenced under the previously announced Integrated Risk Program. BoQ has made good progress in strengthening its financial resilience and holds strong capital and liquidity buffers” the bank released in a sttement.
“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. 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” commented AUSTRAC CEO Nicole Rose.
“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.”
“We have acknowledged the concerns raised by APRA and AUSTRAC. BOQ remains committed to its multi-year Integrated Risk Program to build a stronger and simpler bank with an uplift in risk culture, frameworks, processes and controls. This program will be independently reviewed as previously announced and we will continue to work proactively and transparently with APRA and AUSTRAC” BOQ Chairman Warwick Negus commented on the EUs.
“Our digital transformation is complementary to this strategic priority as we decommission multiple complex legacy systems and reduce our reliance on manual processes.”