The Reserve Bank of New Zealand (RBNZ) has initiated legal action against TSB Bank over Anti-Money Laundering (AML) lapses.
The central bank has filed a statement of claim in the High Court against the lender for breaching relevant AML laws.
In a statement, RBNZ said that the move is an escalated regulatory response to TSB’s non-compliance with aspects of AML and Countering Financing of Terrorism (AML/CFT) Act 2009.
However, the central bank did not claim that TSB Bank was involved in wrongdoings.
TSB Bank has already acknowledged the breaches and is said to be co-operating with RBNZ. They also filed an agreed statement of facts with the High Court.
Deputy Governor and General Manager of Financial Stability Geoff Bascand said: “We are disappointed that TSB did not respond sufficiently to our initial formal warning. We are now obliged to take this High Court procedure.”
Specifically, RBNZ sought pecuniary penalties for deficiencies in the bank’s monitoring procedures and failure to maintain an AML/CFT programme.
The central bank also seeks punitive action against TSB for failing to carry out risk assessment of realty operations.
Additionally, it claims non-compliance on part of the lender with regard to operations in certain countries.
Last month, RBNZ established a new standalone enforcement department to improve compliance.
The new department will be working alongside the central bank’s supervision team to achieve compliance goals.