Financial watchdog sues Macquarie Bank over ‘third party’ withdrawals

Australia’s top financial watchdog is suing Macquarie Bank over allegations it failed to monitor third party withdrawals from customer’s accounts for fraud.

Today the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings in the Federal Court against Macquarie, alleging the transactions “did not pass through a fraud monitoring system or undergo manual checks to confirm the transactions were for fees”.

In one notable example cited by ASIC, $2.9 million in unauthorised withdrawals were made by now-convicted former financial adviser Ross Andrew Hopkins.

Macquarie said it had noted the court proceedings and had reimbursed all clients who lost money as a result of Mr Hopkins’ actions. (Supplied)

“Mr Hopkins misused Macquarie’s systems by processing transactions using his fee authority to steal client funds,” ASIC Deputy Chair Sarah Court said.

“Macquarie failed to properly detect and prevent these unauthorised fee transactions, many of which were over $10,000 each.

“Mr Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes.

“ASIC’s case is not focused on Mr Hopkins’ conduct but rather on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions.”

ASIC Deputy Chair Sarah Court said the case focused on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions. (Ben Searcy)

The allegations span between May 1, 2016, and January 15, 2020, during which ASIC claims Macquarie did not take measures to prevent or detect transactions made using its bulk transacting system that were outside the scope of a “fee authority” given by a customer.

ASIC claims these failures by Macquarie breached its obligations as a financial services provider to ensure its financial services were provided efficiently, honestly and fairly.

In a short statement, Macquarie said it had noted the Federal Court proceedings and had cooperated with ASIC’s investigation into the matter.

Andrew Downe and Shemara Wikramanayake: Macquarie Bank
ASIC claims these failures by Macquarie breached its obligations as a financial services provider.

“ASIC’s court filing notes that this issue arose in relation to 13 clients of an independent financial adviser between 2016 and 2019, who has since pleaded guilty to fraud,” the bank said.

“Following the independent adviser’s failure to compensate his clients for their losses, Macquarie fully reimbursed the 13 clients.

“Macquarie treats the security of its clients’ accounts with the utmost seriousness, and has continued to introduce new controls and processes to respond to the evolving external fraud environment.”

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Reference-www.9news.com.au

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