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Is NAB facing a $700 million fine by AUSTRAC?

There is a chance that National Australia Bank Ltd (ASX: NAB) could face a large fine by AUSTRAC, which it admitted in its annual report today.

The major ASX bank released its full annual report this morning which includes more review and commentary of its operations than the preliminary report which was released earlier this month.

In the full report the company said that it may be involved in a breach or alleged breach of laws governing bribery, corruption and financial crime.

NAB pointed out that in June 2018 Australia’s financial intelligence agency AUSTRAC reached an agreement with Commonwealth Bank of Australia (ASX: CBA) for a $700 million penalty relating to serious breaches of anti-money laundering (AML) and counter-terrorism financing (CTF) laws.

NAB has self-reported a number of AML/CTF breaches to the relevant regulators and has responded to a number of requests from regulators for information and documents.

The big bank said it’s currently investigating and fixing a number of AML/CTF compliance issues. At this stage the potential outcome and total cost of this is uncertain.

Identified issues include certain weaknesses with the implementation of ‘Know Your Customer’ requirements.

NAB warned about the potential size of the breaches, “Given the large volume of transactions that the Group processes, the undetected failure of internal AML/CTF controls, or the ineffective implementation or remediation of compliance issues, could result in a significant number of breaches of AML/CTF obligations and significant monetary penalties for the Group.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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