Commonwealth Bank executives will be hit in the pocket over the bank’s alleged breaches of anti-money laundering and counter-terrorism financing laws, with chief executive Ian Narev and others losing their bonuses.
CBA said its board still has full confidence in Mr Narev but short-term incentives for the CEO and other executives will be cut to zero to demonstrate “collective accountability” for what it has said was an IT error.
Mr Narev was paid $1.43 million in short-term cash bonuses in the 2015/16 financial year, when CBA handed out a total of $8 million in short-term cash bonuses to the CEO and 11 executives.
Fees for CBA’s non-executive directors are also to be cut by 20 per cent in the 2017/18 financial year in recognition of the board’s shared accountability.
Remuneration packages for the 2016/17 financial year will be announced in next week’s annual report, while CBA is expected to report a near-$10 billion profit when it releases full-year results on Wednesday.
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CBA chairman Catherine Livingstone said the board had considered “risk and reputation matters impacting the group” in its decision.
“The board recognises heightened public interest in executive remuneration, particularly having regard to the civil penalty proceedings initiated last week by the Australian Transaction Reports and Analysis Centre (AUSTRAC),” Ms Livingstone said in a statement.
AUSTRAC alleges CBA failed to provide on-time reports of 53,506 cash transactions of $10,000 or more, totalling $625 million, that were made through its Intelligent Deposit Machines (IDMs) from November, 2012 to September, 2015.
CBA said on Monday that a coding error, generated during a software update to its IDMs in late 2012, was responsible for the required Threshold Transaction Reports (TTRs) not being produced.
The fault was fixed within a month of it being discovered in 2015.
“The effect of Commonwealth Bank’s conduct in this matter has exposed the Australian community to serious and ongoing financial crime.” pic.twitter.com/xjZmFKdtV3
— HuffPost Australia (@HuffPostAU) August 3, 2017