The National Australia Bank Ltd (ASX: NAB) share price is falling this morning following news the bank's activities have pricked the ears of AUSTRAC. NAB shares are currently down by 2.91% to $26.71, after closing on Friday at $27.51.
Shares in all the major banks are trading lower this morning, although NAB is leading the charge downwards.
NAB announced AUSTRAC is investigating the bank's designated business group for potential breaches of Australian anti-money laundering legislation.
AUSTRAC is the body responsible for investigating criminal acts in Australia's financial system. Also being investigated by AUSTRAC for potential anti-money laundering laws are SkyCity Entertainment Group Limited (ASX: SKC) and Crown Resorts Ltd (ASX: CWN)'s Crown Perth.
Let's take a closer look at the news released by NAB this morning.
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AUSTRAC investigation
According to a letter from AUSTRAC to NAB, dated 4 June 2021, the body believes there is "potential serious and ongoing non-compliance" regarding the NAB business group's customer identification procedures and ongoing customer due diligence.
Anti-money laundering and counter-terrorism laws dictate financial institutions must properly identify their customers, keep customers' identities up to date, and make efforts to recognise suspicious activities.
AUSTRAC has now begun a formal investigation into potential breaches.
There are 5 reporting entities within NAB's designated business group subject to investigation. These are: NAB Limited, JBWere Limited, Wealthhub Securities Limited, Medfin Australia Pty Ltd, and AFSH Nominees Pty Ltd.
In September last year, Westpac Banking Corp (ASX: WBC) was ordered to pay a record $1.3 billion dollars for breaching anti-money laundering laws. AUSTRAC found Australia's second-largest bank had made 23 million separate breaches of the legislation.
According to NAB, it has been open about facing anti-money laundering and counter-terrorism compliance issues since 2017 and has been working towards resolving them.
Commentary from management
NAB CEO Ross McEwan commented on the news of AUSTRAC's investigation, saying:
NAB takes its financial crime obligations seriously. We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do.
NAB has an important role in monitoring and reporting suspicious activity and keeping Australia's financial system, our bank, and our customers safe.
NAB share price snapshot
Despite today's falls, the NAB share price has been performing well on the ASX of late.
The bank's share price is currently around 18% higher than it was at the start of 2021. It had also gained just over 37% since this time last year.
NAB has a price-to-earnings (P/E) ratio of 19.90 and a market capitalisation of around $88 billion. It also has approximately 3 billion shares outstanding.
