Australian Prudential Regulation Authority and Australian Transaction Reports and Analysis Centre require root cause analysis, impose AUD 50 million capital add-on and open enforcement investigation into Bendigo Bank

The Australian Prudential Regulation Authority (APRA) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced coordinated actions to address weaknesses in Bendigo and Adelaide Bank’s (Bendigo Bank) money laundering risk management, broader non-financial risk management practices and risk culture. The steps follow a Deloitte independent review into suspected money laundering at a Bendigo Bank branch, which found significant deficiencies in the bank’s identification, mitigation and management of money laundering and terrorism financing risk. APRA will require Bendigo Bank to undertake a root cause analysis to assess the extent of non-financial risk management issues beyond money laundering and terrorism financing, reflecting concerns that the weaknesses identified may apply more broadly across the bank’s operations. APRA also imposed an operational risk capital add-on of AUD 50 million, which will remain in place until remedial measures are completed and wider concerns are addressed to APRA’s satisfaction. AUSTRAC has commenced an enforcement investigation focused on whether Bendigo Bank has complied with obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Both agencies noted that these actions do not preclude further steps, with AUSTRAC indicating its investigation will inform any additional action.