Australia's Federal Court has fined Macquarie Bank A$10 million ($6.4 million) for failing to put in place controls to detect and prevent improper third-party payment transactions in customer accounts, the securities regulator said on Friday.
The Australian Securities and Investments Commission (ASIC) said in a statement that banks have allowed customers to delegate various transaction powers to third parties such as financial advisers and stockbrokers, including withdrawal fees.
Macquarie Bank, a division of financial conglomerate Macquarie Group, also provided third parties with a bulk transaction tool that allowed multiple withdrawals across multiple customer accounts simultaneously.
However, between May 2016 and January 2020, Macquarie Bank failed to put controls in place to monitor whether third-party bulk transactions under payment authorization were actually used for payments.
“Despite Macquarie implementing effective controls from January 2020, previous failures enabled financial adviser Ross Hopkins to fraudulently withdraw approximately A$2.9 million from his clients' accounts without Macquarie detecting them,” ASIC chairman Joe Longo said.
Hopkins, who was sentenced to six years in prison in 2021 for defrauding customer funds, ran the transactions through Macquarie Bank's bulk transaction system.
The regulator said Macquarie Bank had agreed to pay the fine. ($1 = 1.5642 Australian dollars) (Reporting by Roshan Thomas in Bengaluru; Editing by Mrigank Thaniwala and Savio D'Souza)
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