Australian regulators took coordinated action on Thursday to address weaknesses in the anti-money laundering and risk-management controls of Bendigo and Adelaide Bank, including the imposition of a A$50 million operational-risk capital charge. 

The action follows an independent Deloitte review into suspected money laundering at a Bendigo branch, which the bank reported to AUSTRAC. The consultancy’s review found “significant deficiencies” in how the bank identifies, mitigates, and manages money-laundering and terrorism-financing risks, according to a joint statement by AUSTRAC and APRA.  

Australia’s prudential supervisor, APRA, said it is concerned that similar weaknesses may apply more broadly across the bank’s operations and ordered the lender to conduct a root-cause analysis to assess the extent of non-financial risk-management issues beyond its anti-money laundering (AML) and counterterrorism financing (CTF) programs. 

Under the action, Bendigo must maintain an additional A$50 million, or USD$33 million, in operational-risk capital. AUSTRAC separately announced the start of an enforcement investigation into the suspected AML/CTF lapses. 

“Although Bendigo and Adelaide Bank is financially sound and comfortably above its core capital and liquidity requirements, we are concerned there may be significant gaps in its risk management framework that need to be addressed urgently,” said APRA Chair John Lonsdale in a statement.

Read more at AUSTRAC