Reserve Bank Files High Court Action Against The Co-operative Bank

The Reserve Bank of New Zealand (RBNZ) has initiated civil proceedings in the Wellington High Court against The Co-operative Bank Limited for alleged breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009. The bank is accused of failing to ensure its transaction monitoring rules were operating correctly, conducting inadequate assurance activities, and maintaining insufficient records. These lapses reportedly led to the bank's failure to identify higher-risk transactions and customers, undertake timely enhanced due diligence, and maintain required records as mandated by the Act.

Acting Assistant Governor of Financial Stability, Angus McGregor, emphasized the seriousness of these systemic failures, stating that they are "serious and unacceptable." The Co-operative Bank has admitted liability for all three causes of action. Both parties have agreed to recommend a penalty of $1.425 million to the Court, though the final decision rests with the judiciary. It is important to note that there is no allegation that The Co-operative Bank was directly involved in money laundering or financing terrorism.

This case underscores the critical importance of robust AML/CFT compliance programs within financial institutions. The RBNZ expects all banks to have appropriate systems and resources in place to actively monitor customer accounts and transactions, supported by effective testing and assurance measures. These steps are essential to identify and mitigate potential money laundering or terrorism financing risks promptly.

From 1 July 2026, the Department of Internal Affairs (DIA) will become the single AML/CFT supervisor for all reporting entities in New Zealand. The DIA has expressed support for this action and will assume responsibility for the proceeding from that date.

As the matter is now before the High Court, the RBNZ has stated that it will not be making any further comments at this time.