TREASURER:
You would have seen the statements today from the CBA as well as the Government in what constitutes the largest civil penalty in Australia's corporate history regarding the settlement between the CBA and AUSTRAC for some $700 million. I want to commend, in particular, AUSTRAC and the prosecutors in securing this significant result for the Australian people. I note this still, of course, has to be approved by the Federal Court. I also welcome the serious admissions by CBA in their statement and, as part of the settlement as well. Those admissions are quite serious and significant relating to failure to carry out appropriate assessments, failure to complete the introduction of appropriate controls, failure to provide the threshold transaction reports on some 53,506 occasions. Failure to comply with the requirements of AML/CTF program relating to the monitoring of transactions. It didn't comply with the requirements of the program relating to those monitoring, as I said, and it failed to report suspicious matters, as well as not taking mitigation action as well. They are very serious admissions. I think the point we have been able to reach, particularly through the actions of AUSTRAC and the prosecutors, provide for an appropriate recognition of what has been a very egregious episode, a very egregious episode in the conduct of the CBA.
As you know, at that time, after AUSTRAC had made its announcement, I asked the chair of the CBA Catherine Livingstone to meet with me in Canberra that next morning and we discussed these matters. I made it very clear that the Government expected that CBA would be taking action and accountability in relation to restoring trust. I think their admissions today, actions that have been taken since that time and actions planned, provide an indication of CBA doing just that, but, as always, the proof will be in the pudding. It is for them to rebuild that trust. It is for them to make these admissions. It is for them to incur these penalties and get on with the job of restoring trust in the conduct of the CBA and this, I think, is another important step towards doing that on this occasion.
You will also know that this egregious episode combined with a series of others led to APRA, with the very strong support and encouragement of the Government, undertaking the Laker Review. That review handed down its findings at the beginning of last month. That report is required reading of every single board in the country and I don't resile a step from what I said on that occasion. The sort of misconduct, I should say, the behaviour that was outlined in that report, I don't think any board could consider itself immune from and it is important that all board directors look at these matters very seriously and ensure that they are taking the steps within their own boards to ensure that that type of behaviour is not occurring in any other listed entities in the country.
What this also shows is that AUSTRAC and the Government have been taking action on these matters consistently for quite a period of time. This is the product, and the Minister for Home Affairs and AUSTRAC, will be making statements on this later today, so I will leave it to them to go into those matters in more detail, but what it demonstrates is that the regulatory authorities here have been on the job, both in investigating these matters and prosecuting them and ensuring that action was being taken immediately in relation to these egregious events. Not unlike the broader action the government has been taking in misconduct in the banking and financial industry more broadly, whether it is our initial, under the Turnbull Government, the implementation of the FSI, the inquiry led by David Murray, through to the Banking Executive Accountability Regime, the Enforcement Taskforce and changes to penalties that have been recommended there the Government is now taking action on. I have already mentioned the Laker Review. There has been a long list of actions being taken and that continue to be undertaken. So we will continue on and get on with that job.
So, it is now, I think very much for CBA to continue to get on with the very significant job that they have and they have much to address and I look forward to them doing just that.
QUESTION:
Any idea where the money has gone? Who have been the beneficiaries of this money laundering?
TREASURER:
I will leave that to the Ministers of Home Affairs and AUSTRAC. They are the ones who are intimate with those sorts of details and they will make whatever appropriate comment is necessary.
QUESTION:
And the $700 million penalty, that will go into government coffers. What will it be spent on?
TREASURER:
Well, that payment should be received in recognising next financial year and, as you know, we have some very significant measures in the Budget which relate to keeping Australians safe. Whether it is the hardening of Australian airports or a range of other issues that we announce in the Budget, the increased presence of the Border Force and AFP at Australian airports. There are a range of matters that we have committed to in the national security space. And you add to that, the work that we have done and paying for the Royal Commission itself. So, that is a bill that still has to be paid. There is no shortage of bills that have to be paid at a Commonwealth level and this will go into consolidated revenue and any other measures that the government undertakes in these areas would be subject to the normal new policy proposal process.
QUESTION:
Given the $700 million fee is there any mind to actually increase the resources of AUSTRAC, given the fact it has now had two successful completions of civil charges in regards to Tabcorp and now the Commonwealth Bank?
TREASURER:
Well, whether it is any of our regulatory agencies, whether it is AUSTRAC or ASIC or any
of these areas, there is a normal process for those agencies to put forward new policy proposals and the Government is always open to receiving those and we would follow the normal process in considering any such proposals.
QUESTION:
$700 million, Treasurer, people will be saying they will raise their fees and charges etc to draw it all back and we will be, the customers will be the ones, that pay that penalty eventually. What do you say to those people?
TREASURER:
I think the CBA or any of these organisations always need to think very carefully about doing just that because it will lead to the conclusion that you have just suggested. They are in a position where they are seeking to build trust again with their customers. So they would obviously have to be very mindful of that and it is not always night follows day when it comes to those sort of issues, as the ACCC found when I introduced the major bank levy. The ACCC found that was not passed on to customers when they did their review of that issue. You will recall at the time I warned the banks not to do that because people would form a very unfavourable view at a time when they should be rebuilding that trust. So, I am sure CBA would be thinking about that very, very carefully. The government, of course, can't back away where there has been such an egregious breach as this, from seeking to impose the appropriate penalty, which we have done.
QUESTION:
Is there a counter argument here? The position might be that this fine is actually too steep, that we're going to smash companies if we go around issuing $700 million fines?
TREASURER:
What we're talking about here is anti-money laundering. What we're talking about here is breaches to systems that can actually put Australia's national security at risk and I don't think...
QUESTION:
We don't know how many of those 53,000 actually did go through to organised crime..?
TREASURER:
We don't operate with a margin of error on this. We make sure that where there are breaches that there should be a very clear understanding that these rules are there for a reason and whether those rules have been breached intentionally or not intentionally, that the penalty will fit the breach.
QUESTION:
Do you think there's a pattern of behaviour taking place in Australia? Seeing it through the Royal Commission, the bank bill swap rate, through this particular situation. The financial institutions in Australia have pretty much thumbed their nose, or in fact been negligent in their obligations to do the right thing by the Australian community and by the Australian regulator?
TREASURER:
Ross, it's a good question but I suppose what it does highlight is whether it was in the case of the BBSW and ASIC taking action, or in the case of these AML breaches, AUSTRAC taking action, that what you see is – or indeed the follow-up to what happened at CBA with the Laker Review and that report – what you're seeing is the government agencies taking action. And these issues actually being prosecuted, these issues being addressed and there being results and penalties and changes in behaviour that must result from this. The Government's agencies, indeed the Government with the Banking Executive Accountability Regime, and the increased resources that we've provided to a number of agencies, that shows that the Government is certainly leaning forward into addressing these problems. It is for the financial sector to be learning lessons from this and changing their behaviour and ensuring that they are meeting community and legal expectations.
QUESTION:
So will CBA officials' behaviour be referred to the Banking Executive Accountability Regime when it's created? And what would be the likely penalties?
TREASURER:
Already what we have seen at CBA and internally is there's been a very significant change in who is running all of these areas in that organisation. I mentioned before that people have gone, some people are still yet to leave, and those changes are being made at the CBA and it's for them to discuss the reasons behind those and I'm sure there'll be an opportunity to quiz Matt a little later today if he's up and making statements on this. The Banking Executive Accountability Regime comes in on 1 July, and that will ensure that going forward that these issues get the appropriate accountability applied to them within banking organisations and the whole point of the Executive Accountability Regime, I think, is to pick up the point that Ross made. At the heart of all these problems, it's the Government's view that there has been failure of accountability in these organisations and that's what you need to address. That's why we moved on it so quickly. That's why it was the signature piece of legislation that was introduced to deal with what was ultimately at the heart of this problem, and that is individual executives and individual board members for that matter, not living up to their accountabilities for what was happening in these institutions. So, that's the law as of 1 July and I know it is already dramatically changing how these matters are being dealt with within inside the major banks.
QUESTION:
You made an interesting point about the CEO making some public comments later. He's not, he said he is not going to come on camera, he is not going to call a press conference.
TREASURER:
Oh well, that's for him.
QUESTION:
Do you think it should be that he should stand there and apologise to people and his shareholders.
TREASURER:
His statement has already done that in terms of its acknowledgment. As I said, there are some very serious admissions here by the CBA… Again, it's for the bank to do that and I'm standing here and I'll leave it to others to decide what they do in this process. But clearly, they need to provide that explanation. It's a very serious and significant settlement and what I'm most interested in is they change their ways and they get it right and they rebuild trust.
QUESTION:
Just quickly on Barnaby Joyce, last night's interview on the Seven Network. Mr Joyce confirmed he knew long before the by-election that he was, his future was at an end. Do you think he should have been more open about that? That he should have taken more punitive action before resigning, that he should have quit earlier?
TREASURER:
I don't know what his state of mind was at that time, or how it's changed since, I don't know. These events are now done. And I think it's important that all those involved can now just get on with their lives and I wish them well in doing that because I imagine it would be very difficult for all those involved to do that. But having had those matters aired, I think it's time to move on for everyone. Frankly, what is more important is what the Deputy Prime Minister today is doing with our Prime Minister. The Prime Minister and the Deputy Prime Minister today are touring drought-affected areas in New South Wales and Queensland. That's what people in rural and regional Australia are actually really focused on at the moment. Something the Government is very seriously focused on at the moment. This has been one of the driest periods they have seen in those parts of the country. And things are getting very, very difficult. And so the Prime Minister and the Deputy Prime Minister are out there listening very carefully to what's occurring on the ground out there. And will be coming back and discussing with cabinet colleagues about where we go from here.
QUESTION:
Were you one of the 631,000 people who watched that interview last night?
TREASURER:
No, I wasn't, actually. I watched The Voice.
QUESTION:
Did Mr Joyce do damage to the Government by staying around as long as he did as Deputy Prime Minister?
TREASURER:
I didn't do any looping, though. I'm not a looper but I think he's pretty good, Sam. Sorry.
QUESTION:
Did Barnaby Joyce do the Government more damage by...
TREASURER:
I'm not going to comment on these things. The Australian public's moved on. I think the media should too frankly.
QUESTION:
It's fair to say move on, but at the end of the day he's opened it back up again.
TREASURER:
It's not something that the Government is doing or interested in or focused on or distracted by. The Government is focusing on these very serious issues I'm talking about here today. The Government is focusing on what's happening in drought-affected parts of the country particularly in New South Wales and Queensland. That's where Australians are focused and if others want to focus on other things well I imagine their viewers won't be watching.
QUESTION:
[Inaudible]
TREASURER:
Sorry?
QUESTION:
Should the Government have moved a bit quicker in terms of resolving the issue with Barnaby Joyce? Everyone knew about it for months beforehand.
TREASURER:
It was a matter that the former Deputy Prime Minister resolved. It was a matter for him to resolve and it's a matter he ultimately took his decisions on. But for the Government, our focus has always been on our core agenda and that has not been distracted as you have seen. The Budget I just announced last month, our challenge is to create a stronger economy because without that, nothing else is able to be achieved. And so that focus on the tax relief, which we continue to prosecute through the Senate when there'll be some significant votes taken on that when we return in a few weeks' time, the work we're doing to back business to create more jobs, the guaranteeing of essential services that Australians rely on, and keeping Australians safe. Obviously ensuring that AUSTRAC is doing its job as part of that process which they clearly have and I commend them again on the work that they have done, and ultimately the Government living within its means. That's what we're about. That's what we're focused on. And we'll continue to do just that.
QUESTION:
Treasurer, the latest ReachTEL poll has the Labor Party trailing in Longman and Braddon for the by-elections. What does that say about the Government?
TREASURER:
Look, I tend not to get carried away with those sorts of things. The by-elections are still several months away, almost two months away and I don't put too much stock on that. I mean, I think the history here is the best thing to set expectations. I mean, it's been more than 100 years since a government has actually won a by-election in a seat held by the Opposition. So, I think that frames expectations, I think accurately, and so I don't put too much stock in those findings. What I do find interesting since that poll came out is that Anthony Albanese all of a sudden is struggling to find the words saying he won't challenge the Leader of the Opposition for his job. That, I think, probably is the more interesting thing about what's happened in response to those polls. Thanks very much.