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ANZ suffers penalties for "breaching responsible lending laws;" suggests KYC/CDD failures

BIScom Subsection: 
Nigel Morris-Cotterill

It's going to cost ANZ about AUD5 million to compensate victims of the scheme that operated through the bank's Esanda car finance business. That's just part of what ASIC describes as "a package of regulatory actions against Australia and New Zealand Banking Group Ltd (ANZ)" But there's an anomaly of the kind that excites our colleagues on the financial crime publications group of PleaseBeInformed. But we got to this one first! Even more, the story looks like a simple management failure but on closer inspection it demonstrates a fundamental lack of attention to the most basic money laundering / terrorist financing KYC/CDD requirements. ASIC may think it's over. AUSTRAC needs to take a look.

Some one, somewhere, is going to get a rocket up the ... well, work it out for yourself and remember that in Australia, there's an R in the word.

Quite who that is remains to be seen.

ASIC says that the penalty related to "loans approved through its former car finance business Esanda." It's that word "former" that is interesting. Take a look at this page from the ANZ website:

It describes Esanda as "a wholly owned subsidiary of ANZ"

Now take a look at this from the Esanda dedicated site:

The logo says "a business of ANZ" and at the bottom the following statement appears: "© 2015 Copyright Esanda, a division of Australia and New Zealand Banking Group Limited ABN." The over-wrapped text (which is as the website displayed) says "Want a competitive Car Loan? Why secured is cheaper."

So, is it "former" as ASIC says or is it functioning as the websites appear to indicate? The position should be clarified.

So far as the case is concerned, ASIC and ANZ have filed a Statement of Agreed Facts and Admissions in the Federal Court. They will make joint submissions that an appropriate penalty to be paid by ANZ is AUD5 million. The penalty amount payable by ANZ will be determined by the Court. The Court has listed the civil penalty proceedings for a first Case Management Hearing on Friday 2 February 2018.

ANZ will remediate approximately 320 car loan customers for loans taken out through three broker businesses from 2013 to 2015, totalling around AUD5 million. The loans are likely to have been affected by fraud. ANZ will:

- offer eligible customers the option of entering into a new loan on more favourable terms than the existing loan
- provide refunds to some customers who have paid their loan out or had the car repossessed
- remove any default listings resulting from the relevant loan

says ASIC which also says "ASIC acknowledges ANZ's cooperation with its investigation and in resolving its regulatory concerns." That's all well and good - as far as it goes. It does not go far enough

The inconsistency as to the status of Esanda is not the major aspect of ASIC's findings. There is something far more serious which goes to the heart of the bank's compliance culture.