Greg Kilminster
Head of Product - Content
Australian banks face scrutiny over interest rates, scams, and alleged misconduct
The CEOs of Australia's four major banks are set to face a parliamentary committee later this week. The House Standing Committee on Economics will scrutinise the banks' performance over the past year, with a particular focus on interest rate predictions, the rise in scams, and allegations of misconduct.
Committee Chair Dr Daniel Mulino has highlighted the "eventful year" for the banking sector, which has been grappling with high interest rates, rising costs of living, and significant losses from scams. He has also expressed concern about the banks' differing views on future interest rate moves compared to the Reserve Bank of Australia.
"The RBA Governor told us it is premature for commentators to be thinking about rate cuts, yet the major banks all predict an easing cycle in the near to medium term. We want to understand the reasoning."
The committee will also consider the banks' efforts to protect customers from increasingly sophisticated scams. Australians lost billions of dollars to scams last year, and the banks have been criticised for not doing enough to safeguard their customers.
In addition, the committee is investigating allegations of misconduct by ANZ. Dr Mulino has emphasised the importance of maintaining ethical standards in the banking sector, noting that the Hayne Royal Commission had set new expectations for behaviour.
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OCC issues August enforcement summary
The Office of the Comptroller of the Currency (OCC) has summarised its August enforcement actions which targeted several national banks and individuals for unsafe or unsound practices.
Among the institutions disciplined, 1st National Bank in Ohio, Generations Bank in New York, Maple City Savings Bank in New York, and Slovenian S&LA of Pennsylvania were all subjected to formal agreements. These agreements require the banks to rectify deficiencies in strategic and capital planning, liquidity risk management, interest rate risk management, and, in the case of Slovenian S&LA, Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance.
On the individual level, the OCC issued Orders of Prohibition against several former bank employees. These include Roberto Garcia, formerly of JPMorgan Chase, accused of stealing more than $12,000 and engaging in account takeovers, and James Gomes, formerly of TD Bank, who allegedly transferred more than $200,000 from a customer’s account to his own. Other individuals facing similar prohibitions include ex-employees of PNC Bank, BOKF, and Citibank, each accused of misappropriating funds or committing fraud.
In addition, the OCC announced the termination of enforcement actions against Beauregard Federal Savings Bank in Louisiana and West Valley National Bank in Arizona, citing the banks' compliance with previously imposed corrective measures.
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Macquarie Infrastructure insider trading case: SEC sanctions Dileep Murthy
The US Securities and Exchange Commission (SEC) has announced that Dileep Murthy has settled charges for insider trading in relation to Macquarie Infrastructure Corporation's (MIC) 2021 announcement about the sale of its Atlantic Aviation business.
As part of his settlement, Murthy has agreed to:
- A cease-and-desist order and a five-year prohibition from serving as an officer or director of a public company.
- Disgorgement of $88,006.59, prejudgment interest of $13,711.30, and a civil penalty of $88,006.59.
Some context
Murthy, who was employed in the investor relations department at an affiliated entity, the Macquarie Group, gained knowledge of the sale negotiations through his role. From 17 May 2021 to 4 June 2021, contrary to his obligations to his employer, Murthy purchased Macquarie Infrastructure call options based on this material nonpublic information. Notably, he executed these trades in an account under a different name.
Following the announcement, when Macquarie Infrastructure's stock price surged by around 10.9%, Murthy made illicit gains amounting to $88,006.59.
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FinCEN issues reminder for financial services firms to watch for illicit fentanyl transactions
The Financial Crimes Enforcement Network (FinCEN) has issued a reminder to financial institutions, urging them to remain vigilant in monitoring and reporting any suspicious transactional activity linked to the illicit fentanyl supply chain and the trafficking of synthetic opioids.
In this reminder, FinCEN refers to existing resources on the subject, including:
- The supplemental advisory on the procurement of precursor chemicals and manufacturing equipment used for the synthesis of illicit fentanyl and other synthetic opioids, issued in June 2024.
- The advisory to financial institutions on illicit financial schemes and methods related to the trafficking of fentanyl and other synthetic opioids, issued in August 2019.
FinCEN continues to collaborate with law enforcement agencies and the private sector in order to effectively address the ongoing opioid crisis.
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CFTC extends EU comparability determination to include UK DCOs
The Commodity Futures Trading Commission (CFTC) Division of Clearing and Risk (DCR) has updated CFTC letter 16-26 to extend its provisions to UK-based derivatives clearing organisations (DCOs) following Brexit.
Letter 16-26, issued in 2016, applied to EU-based registered DCOs in response to the EU’s equivalence determination regarding the CFTC’s regulatory framework for DCOs.
The new letter, 24-10, expands on the requirements outlined in CFTC letter 16-26 and now includes DCOs based in the United Kingdom that are registered with the Commission.
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