Bank of Queensland Ltd (ASX: BOQ) shares are front of mind on Wednesday.
The bank revealed it has entered enforceable undertakings with regulators after the identification of failings in its compliance with anti-money laundering and counter-terrorism financing laws.
Right now, the Bank of Queensland share price is plunging 5.19% to trade at $5.48.
Let's take a closer look at what's going on with the S&P/ASX 200 Index (ASX: XJO) bank on Wednesday.
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What's weighing on the Bank of Queensland share price?
The Bank of Queensland announced it has entered enforceable undertakings with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Prudential Regulation Authority (APRA) this morning.
Its undertaking with AUSTRAC will address issues with its anti-money laundering and counter-terrorism financing program.
Another with APRA will concern weaknesses in the bank's previous risk management practices and risk culture.
APRA has also added $50 million to the bank's operational risk capital requirement.
That's expected to lower its level two common equity tier 1 (CET1) ratio by around 0.17%. It boasted a CET1 capital ratio of 10.71% as of 28 February.
The respective undertakings will see the bank preparing remedial action plans and will demand accountability for executives.
The agreement with APRA will require the appointment of an independent reviewer, while that with AUSTRAC demands an external auditor.
Commenting on today's announcement, Bank of Queensland chair Warwick Negus said:
BOQ remains committed to its multi-year integrated risk program to build a stronger and simpler bank with an uplift in risk culture, frameworks, processes, and controls.
Our digital transformation is complementary to this strategic priority as we decommission multiple complex legacy systems and reduce our reliance on manual processes.
The bank set aside $60 million within its first-half earnings to fund its integrated risk program.
What did regulators say?
On announcing the agreement seemingly weighing on the Bank of Queensland share price today, AUSTRAC CEO Nicole Rose said:
The actions undertaken by AUSTRAC and APRA in relation to BoQ highlight whole of government efforts to maintain the integrity of Australia's financial systems.
I am pleased with BoQ's cooperation over the past six months, and their commitment to taking remedial action to ensure they meet their obligations under the AML/CTF Act.
Meanwhile, APRA chair John Lonsdale said:
Although BOQ is financially sound and comfortably above its core capital and liquidity requirements, there are significant gaps in its risk management framework that must be addressed as a priority, particularly in the non-financial risk, anti-money laundering and counter-terrorism financing spaces.
Bank of Queensland share price snapshot
Today's tumble sees the Bank of Queensland share price deeper in the longer-term red.
The stock has plunged 18% since the start of 2023. It's also currently 26% lower than it was this time last year.
For comparison, the ASX 200 has gained 3% year to date and has slipped 1% since this time last year.
