Question

Do Commonwealth Bank Australia have any unethical behaviours in the past 5 years ? Provide some breaches of its own code of ethics. And how did these branches affect the CBA?

Answer 1

Answer-

Introduction -

Ethics and the code of conduct act as a guide of principles, which is designed to aid the professionals to carry out their business honestly, and with integrity. Code of ethics often acts as a value statement for guiding the behaviour of others and thereby affects the process of decision-making (Davies, 2017). In the banking sector, the code of conduct and the ethics act as the internal guidelines that help in making a commitment for operating legally and at the same time promoting accountability, integrity and honesty.

In Australian banking sector, the ethics and the code of conduct guide the employees based on the laws and ensure that all the policies are followed, and the banking products become more customer centred. The present report would analyse two cases related to the violation of the ethical standards in the Commonwealth Bank of Australia (CBA)

CASE STUDY 1: AUSTRALIA'S BIGGEST BANK HIT WITH RECORD FINE FOR MONEY-LAUNDERING SCANDAL

Money laundering refers to the method of developing the appurtenance that a tremendous amount of capital acquired from illegal activity such as terrorist activity, drug trafficking, devised from a genuine source. The money from the unlawful activity is regarded as dirty, and the process launders the cash to make its appearance clean.

From 2012 to 2015, CBA (Commonwealth Bank of Australia) failed to report over 53000 doubtful transactions using its ATM to establish on time. Drug mobs laundered money based on the loophole that enabled for large unidentified deposits to the accounts of CBA. It has affected the business practices those are poor, as these are exploited by the criminals to launder the earnings of their crimes. It has affected the daily lives of Australians and placed the community at danger by improving opportunities for bombers to upkeep attacks here and overseas, and allowing ordered crime groups to tout drugs to friends and families. Thus, the criminal activity is not only affecting the financial scenario of Australia, but also the social, environmental, legal and political environment of the nation. It is devastating for the national peace and prosperity of the country. CBA has put the blame of the money laundering on the coding error took place in the computer system that allowed the suspicious transaction.

It is projected that money launderers scrub equal to $2 trillion per year that accounts to 5% of the GDP of the entire world. The international impact is staggering in economic, social and security terms. Successful money laundering refers to the criminal offences pays off.

EFFECT ON CBA

In the aforesaid case study, Scott Morrison has darned the Commonwealth bank for creating risk to national risk after the most significant financial institution of the nation was hit with a record fine of $700 million for breaking the law of anti-money-laundering and counter-terrorism. The most significant penalty in the corporate history of Australia among warnings from the head of fiscal intelligence supervisor

CASE STUDY 2-AUSTRALIAN BANKS ABUSE OF CUSTOMERS

The inquiry of the customer service and the customer advice of the Australian banking sector has helped to make shocking revelations about the abuse of the customers. The investigation has found that the four biggest banks of Australia namely Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Westpac and Australia and New Zealand Banking Limited (ANZ) has engaged in a culture of rule-breaking, rigging of interest rates and money laundering. Critics have made it evident that these four leading banks of Australia have taken the customers for granted.

CBA was accused in the year 2017 for breaching 53,000 anti-money laundering cases. No steps were undertaken by the bank to prevent any money laundering. The consequence for the same was quite severe as the market capitalisation of CBA fell by A$4bn and encouraged the government to enquire regarding the misconducts of the Australian banks.

EFFECT ON CBA

Considering the actions of the bank and violations of the ethical standards, ASIC requested a deceleration for the outrageous conduct from the court and the financial penalties due to the breaches of the ethical conduct. The bank was charged a penalty that has created an impact on the fiscal year results and clearly generated distrust among the common people.