On Monday the National Australia Bank Ltd (ASX: NAB) share price was among the worst performers on the S&P/ASX 200 Index (ASX: XJO).
The banking giant's shares ended the day 3% lower at $26.64.
Why did the NAB share price tumble lower?
The NAB share price came under pressure on Monday after it revealed that AUSTRAC has identified serious concerns with its compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act.
According to the announcement, the regulator believes there is "potential serious and ongoing non-compliance" regarding NAB business group's customer identification procedures and ongoing customer due diligence.
Given the penalties that AUSTRAC has previously dished out to big four rivals Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), this sparked concerns that NAB will be given a hefty fine in the future.
Is this a buying opportunity?
One leading broker that sees the weakness in the NAB share price as a buying opportunity is Goldman Sachs.
This morning the broker retained its conviction buy rating and $29.97 price target on the bank's shares.
Based on the latest NAB share price, this price target implies potential upside of 12.5% excluding dividends. Including dividends, this stretches to over 17%.
What did Goldman say?
The broker appears optimistic that things will be different compared to AUSTRAC's dealings with CBA and Westpac.
Goldman commented: "While the risk of civil proceedings against NAB for contraventions of its AML/CTF requirements remains, and today's announcement needs to be read in the context of CBA's A$0.7 bn civil penalty and WBC's A$1.3 bn civil penalty for their own specific AML/CTF breaches, we would highlight a number points."
"The issues highlighted today by AUSTRAC in relation to customer identification procedures and ongoing customer due diligence are relatively consistent with the details disclosed by NAB in its 1H21 result contingent liabilities disclosure."
"In relation to NAB, AUSTRAC has stated that, at this stage, it is not considering civil penalty proceedings and this is reflective of work undertaken by NAB to date. This language is quite different from the language used by AUSTRAC in its original notice of filing of civil proceedings against Westpac Banking Corporation, which cited, for example, systemic failures in its control environment and inadequate Board oversight," it added.
