Money Laundering.

The government thought it had a useful curb on money laundering with its reporting laws.  Anyone trying to deposit money at a bank or settle any other form of financial transaction with cash money that exceeds ten thousand dollars could expect a visit from the authorities demanding to know about the source of that money.   Unless it could be satisfactorily explained, it could be deemed " the proceeds of crime " and seized.  All such seizures were of great interest to both the police and the taxation department - and a thorough investigation of the culprits lifestyle and business followed.

This was aimed primarily at the drug trade.  A successful drug trader can make millions  and this is primarily cash money.  The money flow is needed to pay for the drugs smuggled into the country and to pay those employed in the syndicate who usually flaunt their wealth with flash cars and other luxuries.  This ostentatious display of wealth is often what alerts police to the presence of illegal activity.

This flow of cash money is also involved in the financing of terrorist activity.  Terrorists urge their supporters in Australia to engage in crime and donate money and this breaks Australian law. These reporting laws make it difficult for financial support to reach the terrorists in another country by the usual lawful money transfer systems.

It seems that the criminal element quickly found a way to circumvent these reporting laws - by using the bank ATM system.   One of the benefits of depositing cash money via an ATM is anonymity.  The money - which is slightly less than ten thousand dollars - is to be credited to an account opened in a fictitious name, and later - using a credit card - that money is transferred to an account in another country.

Obviously, a single transaction could slip through the net unnoticed, but systems are in place to ring alarm bells when a pattern emerges and it seems that Australia's biggest bank allowed this to proceed unchallenged. Multi millions passed through the ATM's and eventually out of the country.  Even when it was brought to their notice, they took no action - and now they face the consequences.

The bank is accused of failing to inform regulators about some 53,000 suspicious deposits passing through its network of ATMs.  The bank faces a potential fine of $ 18 million for each contravention under the present legislation.   It could be the biggest impost ever imposed in the history of banking in Australia.

It will certainly cause the government to rethink the benefits of forcing commerce to embrace a wider use of electronic payment methods for purchases by doing away with large denomination banknotes.  Not only would that make paying cash for drugs difficult it would cripple the black economy because all forms of electronic payments leave behind a record.

It also seems certain that when this massive fine kicks in, all aspects of the money handling industry will be complying with the reporting laws astutely.