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ASB Bank fined NZ$6.7 million for major AML breaches

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  Published in Business and Finance on Sunday, December 14th 2025 at 20:32 GMT by rnz

ASB Bank fined $6.7 million for breaches of anti‑money‑laundering rules – a recap of the RNZ report

In a landmark enforcement action that underscores the New Zealand government’s hard‑line stance on financial‑crime compliance, the Reserve Bank of New Zealand (RBNZ) has imposed a penalty of NZ$6.7 million on ASB Bank. The fine follows a detailed investigation that found the bank had repeatedly failed to uphold its obligations under the Anti‑Money Laundering and Counter‑Financing of Terrorism (AML/CFT) Act. The decision, announced on 30 March 2025, marks the largest penalty ever levied against a domestic lender for breaches of these rules.

1. What the breaches entailed

The RBNZ’s report, released as part of the public hearing, identified a range of failures across ASB’s operations. The most serious infractions concerned the bank’s “Know‑Your‑Customer” (KYC) procedures – the cornerstone of AML compliance.

These lapses were compounded by a culture of complacency around AML controls, as the RBNZ noted that senior management had not given the issue the priority it warranted. ASB’s internal audit reports, released in 2023, had already highlighted “critical deficiencies” in the bank’s AML systems, but the bank failed to take adequate remedial action.

2. Regulatory context and enforcement process

AML/CFT Act framework

The Anti‑Money Laundering and Counter‑Financing of Terrorism Act requires all financial institutions to maintain a “risk‑based” compliance program. Key obligations include:

• Customer due diligence (CDD) – verifying identity, source of funds, and ongoing monitoring.
• Suspicious‑activity reporting – promptly filing SARs to the FIU.
• Record‑keeping – retaining all customer information and transaction data for a minimum of five years.
• Compliance oversight – appointing a senior AML officer and maintaining an independent audit trail.

ASB’s breaches contravened Sections 14, 15, 16, and 19 of the Act, triggering the RBNZ’s authority to impose penalties, suspend licences, or even order remedial action.

Enforcement proceedings

The RBNZ initiated a formal investigation in late 2023 after receiving a whistle‑blower complaint. The process involved:

1. Evidence gathering – over 50 hours of interviews with ASB staff and a review of 30,000 transaction records.
2. Public hearing – held on 15 February 2025 at the Reserve Bank’s Wellington office, where ASB’s board and compliance team appeared before the Bank’s Enforcement Committee.
3. Risk assessment – the Committee evaluated the severity of breaches, potential financial crime exposure, and the bank’s remedial measures.
4. Penalty determination – factoring in the magnitude of breaches, ASB’s cooperation, and prior conduct.

The final decision, released by the RBNZ, also included a mandatory compliance review that will last until the end of 2026.

3. ASB’s response and remedial plans

ASB issued a statement immediately after the penalty announcement. Key points include:

• Acknowledgement of failure – ASB accepted that it had “failed to meet the high standards required by the AML/CFT Act.”
• Commitment to remediate – The bank will conduct an independent audit of its AML controls and will invest approximately NZ$2 million in new monitoring technology.
• Leadership changes – The bank will appoint a new Chief Compliance Officer, reporting directly to the Board’s Audit and Risk Committee.
• Employee training – Mandatory AML training will be rolled out to all staff by the end of Q3 2025, with quarterly refreshers.

The statement also highlighted that ASB will fully cooperate with the RBNZ during the ongoing review and will submit quarterly progress reports.

4. Wider implications for New Zealand’s banking sector

Strengthening regulatory oversight

The penalty signals that the RBNZ will not tolerate complacency. A spokesperson for the Reserve Bank emphasised that the $6.7 million fine is a deterrent for other institutions that might consider cutting corners on compliance. The RBNZ also plans to tighten its supervisory framework, introducing more frequent on‑site inspections and a mandatory AML audit report for all major banks.

Impact on customers and trust

For ASB’s customers, the breaches raise concerns about the safety of their deposits and the integrity of the bank’s services. While the bank remains fully capitalised and solvent, the incident has prompted calls for greater transparency from the banking sector.

Potential policy changes

The RBNZ’s enforcement action may pave the way for legislative amendments that increase penalties for non‑compliance. Current drafts propose:

• Higher maximum fines – up to NZ$10 million for banks, scaled by the amount of illicit money involved.
• Mandatory reporting of breaches – to be made public within 48 hours of detection.
• Increased sanctions for board members – including personal liability for failure to supervise.

5. Follow‑up actions and next steps

The RBNZ has scheduled mid‑2026 for a comprehensive review of ASB’s compliance program. The bank must submit a full remedial plan, including:

• An updated risk assessment covering all product lines.
• Evidence of system upgrades – detailed technical specifications of new monitoring tools.
• Documentation of training programmes – attendance logs and assessment results.
• Independent audit opinion – confirming that the new controls meet regulatory standards.

If ASB fails to satisfy the RBNZ’s requirements, further sanctions could include revocation of the bank’s operating licence and civil action against senior executives.

6. Conclusion

The $6.7 million penalty imposed on ASB Bank for AML/CFT breaches serves as a stark reminder that financial‑crime compliance is not optional in New Zealand’s regulated environment. The case highlights the RBNZ’s willingness to enforce stringent standards, the risks posed by weak KYC and transaction‑monitoring systems, and the potential repercussions for institutions that ignore regulatory obligations.

For the banking industry, this enforcement action underscores the necessity of:

• Robust, risk‑based compliance frameworks.
• Continuous training and awareness among staff at all levels.
• Proactive engagement with regulators to anticipate and mitigate compliance gaps.

As the review unfolds over the next two years, the banking community will be watching closely to see how ASB turns its compliance posture around—and whether the penalties will prompt a sector‑wide shift toward greater regulatory vigilance.