APRA and AUSTRAC have both taken action against the banking group in response to weaknesses in its money laundering risk management, non‑financial risk management practices and risk culture.
Bendigo and Adelaide Bank Limited has been levelled with two separate regulatory actions following concerns over its risk management.
The actions - which aim to ensure Bendigo Bank intensifies its efforts to strengthen its non-financial risk management systems and practices - come after an independent review was undertaken by Deloitte into suspected money laundering at a Bendigo Bank branch, which the bank self-reported to the Australian Transaction Reports and Analysis Centre (AUSTRAC).
This independent review found "significant deficiencies" with Bendigo Bank’s approach to the identification, mitigation and management of money laundering and terrorism financing risk.
Since then, four people have been arrested as part of an investigation into alleged money laundering at one of Bendigo and Adelaide Bank’s branches. The four individuals were interviewed over a Commonwealth offence relating to dealing with suspected proceeds of crime and were later released pending further inquiries. The police investigation is ongoing and the bank is working closely with the bank.
The banking group has since engaged Deloitte to scope a comprehensive uplift program informed by the investigation.
AUSTRAC enforcement action
AUSTRAC has now commenced an enforcement investigation into “serious potential contraventions of the AML/CTF Act (2006)”.
This investigation will focus on whether Bendigo Bank has complied with its obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
AUSTRAC has not yet decided on the appropriate regulatory response, including whether enforcement action will be taken.
AUSTRAC’s acting CEO, Katie Miller, said the financial intelligence agency had been “closely monitoring” Bendigo Bank’s compliance with its AML/CTF obligations.
“This enforcement investigation follows supervisory engagement with Bendigo Bank and the bank’s recent disclosure of deficiencies in its approach to the identification, mitigation, and management of money laundering and terrorism financing risks,” Miller said.
“Our investigation will examine Bendigo Bank’s compliance with the AML/CTF Act and inform any further AUSTRAC action.”
APRA capital charge
Meanwhile, the Australian Prudential Regulation Authority (APRA) has determined to apply a $50 million operational risk capital charge to the bank, which will apply from 1 January 2026.
The capital charge is expected to reduce the Bank’s Level 2 Common Equity Tier 1 (CET1) ratio by approximately 17 basis points (bps).
The capital add-on will remain in place until Bendigo Bank has completed remedial measures and addressed wider concerns to APRA’s satisfaction.
APRA is also requiring Bendigo Bank to undertake a “root cause analysis” to understand the extent of non-financial risk management issues at the bank, going beyond money laundering and terrorism financing.
APRA chair John Lonsdale said: “Although Bendigo and Adelaide Bank is financially sound and comfortably above its core capital and liquidity requirements, we are concerned there may be significant gaps in its risk management framework that need to be addressed urgently.
“While the non-financial risk, anti‑money laundering spaces are a priority in light of the recent independent report, APRA is concerned that similar weaknesses may exist across the bank.
“The measures we are announcing today alongside AUSTRAC aim to ensure that fundamental deficiencies in Bendigo Bank’s risk management framework are identified and addressed and those responsible are held to account as appropriate.”
Responding to the actions, Bendigo and Adelaide Bank Limited said the board and executives were “fully committed to the required uplift in non-financial risk maturity”.
The bank issued the following statement: “The bank will continue to engage constructively with AUSTRAC.
“The bank continues to work on uplifting its approach to risk management, in particular non-financial risk and acknowledges the need to intensify its efforts.”
Bendigo Bank chair Vicki Carter added: “The bank recognises robust risk management practices are critically important to ensure the Bank can continue to protect its customers and deliver on its purpose of feeding into the prosperity of customers and communities.”
Bendigo Bank CEO and Managing Director Richard Fennell said: “Bendigo Bank has taken a number of steps to improve its risk capability and strengthen its risk culture over the last 12 months however I recognise the need to intensify our focus and our efforts.”
The APRA and AUSTRAC actions do not preclude further actions from being taken by the agencies in the future.
[Related: Arrests made after Bendigo Bank identifies potential money launderingg]
