Macquarie Bank is facing civil charges as a result of system and process flaws that allowed fraudulent fee payments from financial advisers to slip through its bulk transactions system undetected.
The Australian Securities and Investments Commission (ASIC) filed a Federal Court case against Macquarie on Tuesday, accusing the bank of “failing to adequately monitor and control transactions by third parties, such as financial advisers, on their clients’ cash management accounts.”
ASIC claims that between 1 May 2016 and 15 January 2020, transactions made through the bank’s bulk transaction system utilising a ‘fee authority’ “did not pass through a fraud monitoring system or undergo manual inspections.”
It means that other parties could use the fee power to misappropriate or attempt to misappropriate Macquarie’s customer monies, like in the example of former independent adviser Ross Andrew Hopkins, who embezzled $2.9 million via Macquarie’s systems.
“Macquarie failed to detect and prohibit these unauthorised fee transfers, many of which were over $10,000 each,” ASIC deputy chair Sarah Court said, calling Hopkins’ actions “an illustration of what can go wrong when banks don’t properly monitor their systems.”
Macquarie issued a statement acknowledging the proceedings, saying it “has cooperated with ASIC’s examination into this incident.”
“According to ASIC’s court filing, this issue arose in regard to 13 clients of an independent financial adviser who pled guilty to fraud between 2016 and 2019,” the financial firm said.
“Macquarie fully compensated the 13 clients after the independent adviser failed to recompense them for their losses.”
“Macquarie takes the security of its clients’ accounts very seriously, and we’ve kept introducing new controls and processes to keep up with the changing external fraud environment.”
