The Reserve Bank of New Zealand (RBNZ) has filed civil proceedings in the Wellington High Court against the country’s Co-operative Bank in respect of three breaches of core requirements under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (Act), stemming from at least 2020.
The RBNZ’s claim relates to the adequacy and effectiveness of the Bank’s AML/CFT programme, in particular its failures to:
- ensure all of its transaction monitoring rules were operating correctly;
- conduct adequate assurance activities to ensure the effectiveness of its account and transaction monitoring; and
- maintain adequate records relating to its transaction monitoring and assurance activities, as required by its AML/CFT programme.
As a result, says the RBNZ, the bank “failed to identify higher risk transactions and customers, undertake timely enhanced due diligence, and maintain required records as required by the Act”.
Acting assistant gGovernor of financial stability Angus McGregor said: “This is the second AML/CFT civil proceeding the RBNZ has filed against a reporting entity in the last six months. This enforcement response promotes the AML/CFT Act’s purposes, which are to detect and deter money laundering and the financing of terrorism; maintain and enhance New Zealand’s international reputation; and contribute to public confidence in the financial system.
“This action again reinforces that prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable.
“The RBNZ expects all banks to have appropriate systems and resources in place to actively monitor customer accounts and transactions, supported by fit for purpose testing and assurance to fully comply with the requirements of the Act. These measures are essential to identify and mitigate potential money laundering or terrorism financing risks in a timely manner.”
The Co-operative Bank has admitted liability for all three causes of action.
The parties have agreed to jointly recommend to the court that a penalty of $1.425m is appropriate in this case, though the penalty is ultimately for the court to determine.
It is not alleged that the Co-operative Bank was itself involved in money laundering or the financing of terrorism.
As the matter is now before the High Court, the RBNZ will not be making any further comment at this time.
From 1 July 2026, the Department of Internal Affairs (DIA) will become the single AML/CFT supervisor for all reporting entities in New Zealand. The DIA is supportive of this action and will take carriage of the proceeding from 1 July 2026.
In a statement on its website, the bank said: “The Co-operative Bank acknowledges and accepts responsibility for breaches of its Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) obligations, following the Reserve Bank of New Zealand filing a civil proceeding in the High Court.
“The proceeding concerns compliance issues from past practices that relate to the Bank’s transaction monitoring programme, including assurance over that programme.
“Importantly, there are no allegations that the Bank has been involved in money laundering, terrorist financing or any other criminal activity, or that the non-compliance has resulted in adverse customer impacts.”
CEO Mark Wilkshire added: “Banks have an important role in helping identify financial crime and supporting the integrity of New Zealand’s financial system. We acknowledge that aspects of our past transaction monitoring programme did not meet the required standards.
“We have worked constructively with the Reserve Bank throughout this process and have taken steps to strengthen our systems and controls. We are confident that the improvements already taken, and planned for the future, significantly strengthen our compliance in this area.”
The bank added that it has made a provision for the potential penalty in its 2026 financial statements.
