Not enough done on anti-money laundering compliance, CBA chair admits

Staff should also have more "situational awareness," she said. Senior council assisting Rowena Orr pressed her about what "situational awareness" means.

Livingstone replies it means all staff, from bank tellers to management, reacting and responding to issues that lie outside their day-to-day working environment.

We can only hope the bank's situational awareness improves. Livingstone is set to appear before the commission again tomorrow at 9.45am. We will see you then.

Livingstone agrees.

CBA’s director induction process could be improved, she says.

"Why is that," asks Ms Orr.

“I can’t say why that is but it would have been discussed,” Ms Livingstone said.

Ms Livingstone agrees that the board committee did not take the warning signs of its anti-money laundering compliance problems “seriously enough” and it relied too much on the assurances of management.

Then Orr asks: "Do you think the committee took the issue of anti-money laundering compliance seriously enough?"

“I think it’s fair to say not enough,” Livingstone said.

"I think it's a fairly damning chronology of - in some instances the bank's behaviour, in other instances, the bank's control over its non-financial risks," was Ms Livingstone's short reply.

But having got that out of the way, the commission's transcript and computer system went down, prompting Hayne to call a halt to proceedings.

"You are privileged Ms Livingstone, you have all aspects of the system go down around you," the commissioner quipped as he shut down the hearings.

After some toing and froing Commission Hayne steps in to cut through Comyn’s corporate language with a series of simple questions.

While the following exchange is long, it shows what a winding road the royal commission has had to take to squeeze answers out of witnesses.

Here is Hayne in full flight...

Hayne: "Mr Comyn, it's more than systems, isn't it?"

"Yes, it is," Comyn says.

Hayne: "Fees were coming in?"

"Yes."

Hayne: "And an amount was going out in payment to advisers?"

"Yes, that's right."

Hayne: "There was a difference?"

"Yes, absolutely."

Hayne: "And the difference was being taken by the entity?"

"Yes. And as Ms Orr said - and I certainly intended to articulate - we should never of - we should never have commenced a service without the appropriate systems, etcetera, in place, to ensure.."Comyn says.

Hayne: "Well, the point I'm asking you to grapple with is that it's more than systems. Take the case where there is no assigned adviser?"

"Yes."

Hayne: "A fee is charged to the customer. Where does that fee end up? It doesn't go out to an adviser. There's no assigned adviser?"

"There's a licensee."

Hayne: "So there's a difference between what is charged, what is paid out, and the difference goes to the licensee. Is that right?

"Yes, it is."

Hayne: And that would have been apparent to the licensee throughout the process, would it not?"

"Yes, it would."

Hayne: "So the licensee knew at all times that it was charging more to clients than it paid out?"

"During the - that time period, yes," he said.

Hayne: "Yes. Go on, Ms Orr."

If you found that exhausting, Hayne had to go back through this a second time with Comyn even pointing out...

Hanye: "There were cases where there was no assigned adviser and dare I mention it, there were cases where the dead were being charged?"

"Yes, says Comyn.

Orr's grilling of Comyn on who was in charge of the part of the bank that was responsible for the breaches started like this...

Orr: "Now, the consequences of those contraventions were extremely serious, weren't they, Mr Comyn?"

"Yes, they are," Comyn says.

Orr: "From the introduction of the IDMs until daily limits were introduced, several million dollars of money laundering occurred through your IDMs?"

"Yes, that's right," he said.

Orr: "And some of the people involved in that money laundering have since been prosecuted and convicted of criminal activity?"

"Yes, that's right."

Orr: "And if CBA had introduced the daily limits earlier, it would have disrupted money laundering activity through the IDMs by drug syndicates?"

"Yes, I wouldn't - I wouldn't limit the causal connection to the daily limit…. But certainly our failures contributed to the inability to provide law enforcement with necessary intelligence that would - intelligence that would have led to earlier prosecutions, and, of course, there could have been other matters as well because we didn't appropriately manage all of the risks associated with our AMLCTF [anti-money laundering, counter terrorism financing] obligations," Comyn says.

Orr: "So the failures meant that law enforcement could not disrupt money laundering through your IDMs by drug syndicates, firearms importation syndicates and distribution syndicates?"

"Yes, that's right," Comyn admits.

It was damning indictment on the bank's practices. As were the following comments...

"There was a widely held view that we were actually doing a good job which we clearly were not," Comyn said.

"I say all of these failings are ours. I don't mean in any of my explanation to
imply it's a failure of any other party other than the bank."

And another...