CBA Money Laundering Wiki

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CBA Money Laundering Wiki

Post by Jandamurra » 22 Aug 2017, 2:33 pm

Hello all. I thought I'd start this thread as a kind of "wiki" for those interested in this scandal. I'll start it off by putting some talking points up-let's say this.
When I first heard of this scandal a couple of weeks ago, they were talking about up to one trillion dollars being unaccounted for or in fines.
I'm trying to find a link to that figure, but that's what I heard, on a stack of Bibles.
Compare with the figures cited in this story from 21/8-
http://www.abc.net.au/news/2017-08-18/c ... ar/8820686
If I may be permitted a somewhat long quotation from the article-

Independent senator Derryn Hinch quizzed Mr Clark on the extent of the potential penalties which if applied to each of the 54,000 breaches would amount to around $960 billion.
"I can't comment on the penalty other than to say it's a matter for the Federal Court. There's a maximum penalty per contravention and that's $18 million," Mr Clark said.
However, industry figures say speculation in the media about the maximum penalty is unrealistic and unsustainable while chief executive Ian Narev told the ABC that some estimates were "out of the ballpark".


Practically a trillion dollars could be at stake. If true, Australia has never seen anything remotely like it. This is huge news.

I don't want to seem too cynical but the sort of denial at the end doesn't ring true to me. Time will tell, of course.
I also don't particularly like the headline-

CBA the only bank on the AUSTRAC radar in money-laundering and terror financing allegations

Somehow I have a sneaking suspicion there should be the word 'not" somewhere in there.
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Re: CBA Monmey Laundering Wiki

Post by Oldbloke » 22 Aug 2017, 3:00 pm

Not the same, but when companies are prosecuted for OHS breaches, typically the fines are only a small fraction of the max. eg about 10% - 30%
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Re: CBA Monmey Laundering Wiki

Post by Daddybang » 22 Aug 2017, 3:33 pm

Can't see the max penalties being given to them but either way It won't be the bank itself that pays but shareholders thru their dividends and customers thru fee's etc kinda like the bank tax (imo) :unknown:
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Re: CBA Money Laundering Wiki

Post by Lorgar » 22 Aug 2017, 4:56 pm

The numbers being quoted for this thing as so far beyond ridiculous it's not even a joke, it's flat out stupid and shows the people covering this don't know what the f*** they're talking about.

(I'm talking about polis, journos etc. plugging the stupid figures on the radio etc. Not having a go at you Jandamurra.)

A few company basics here (with rounded numbers).

CBA shares are worth $78~ (at the time of writing) and there are 1.7~ billion shares in the market.

That's a market cap of approx $133~ billion. You could roughly call this the worth of the company.

In their annual results published 09/08/17, CBA posted a net profit after tax of $9.8 billion

So, a $960 billion dollar fine would be roughly 7x the entire worth of the company, or 97 years profit.

A trillion dollars is not at stake here, such a fine is literally impossible. CBA do not have even remotely near that much cash or income to pay, and even a fraction of such a fine is not remotely realistic as the CBA would simply fold under its weight.

I appreciate most people don't follow the stock markets or financial news, but honestly, CBA is one of the most traded and covered stocks on the market. Goldman Sachs, Morningstar, Consensus, Citi, Morgan Stanley etc. and every Australian broker out there is watching it.

All of this is publicly available. Any stock broker could tell you all this off the top of their head. It would have taken a politician or journo 5 minutes to find these figures if they were at all interested in the facts rather then whipping up a storm.


For arguments sake, lets say a fine is issued, lets have a look at who pays.

CBA isn't owned by "the man" or "fat cats". It's a publicly traded and owned company.

Approximately 1.4 billion of their shares are owned by the general public.

And 262~ million are owned by institutions.

This includes holdings in superannuation funds. Even if you don't personally trade shares, every one of us almost certainly has currently, or has had shares in CBA via their superannuation funds investments.

A tiny remainder of shares are owned by private companies and insiders. The CEO getting his $10 million a year or whatever is a pittance compared to the public.


We own CBA. They wouldn't be punishing management with a fine.

Any fines issued comes out of profit, and when there's no profit there are no dividends payed to shareholders.

No dividends means loss of income, and when dividends are cut, the share prices drops. That means loss of capital.

CBA currently have a dividend of 5.5% fully franked. This is good, and a major part of the appeal of CBA stocks. CBA cutting their dividend to zero would disastrous for their stock price.


Outside of how shareholders in the company are affected, the CBA also makes up a huge chunk of the ASX200. Along with the other 3 big banks and big mining companies like BHP, RIO etc.

The loss of equity, uncertainty and panic selling of CBA crashing would cause our entire stock market to fall.

Going after the CBA like the media is portraying they will, would be like the Australian Government going Lehman Brothers on itself.

I'll tell you what's going to happen. Bugger all.
Last edited by Lorgar on 24 Aug 2017, 9:56 am, edited 6 times in total.
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Re: CBA Money Laundering Wiki

Post by Lorgar » 22 Aug 2017, 5:03 pm

(For those who missed the going Lehman Brothers on itself joke, the LB bankruptcy which tipped us into the GFC was over $619 billion debt.)
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Post by brett1868 » 22 Aug 2017, 5:35 pm

An interesting story that strikes fairly close home given what I do for a living an who I work for.

The First argument the CBA made is that it's technically (according to them) a single breach that was exploited multiple times. My take on that is that since the law prosecutes on a per count basis their argument won't hold up in court.

The second line of enquiry should be as to how this coding error came about and more importantly how did the bad guys learn of it? It's not like you get told the transaction will be reported to AUSTRAC and if that report is actually submitted by any ATM when depositing so finding this flaw isn't a simple test of each institutions ATM network.

All banks have a regulatory and compliance team of people numbering in the hundreds that has the sole responsibility of ensuring the bank complies will all the necessary government legislation, APRA reporting, ASIC reporting and Executive reporting just to name a few.

Being Australia, the land of the oppressed but easily obtained 457 Visa for software developers I personally suspect that the code was compromised deliberately. An internal hack if you will, to enable this to occur.

Share price isn't totally driven by dividends but more by supply / demand based on the perception of risk vrs gain which varies per entity. Trader rely on reading the changes in perception in the market to make money, a fortune made or lost can depend on what Trump stupidity comes next.
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Re: CBA Money Laundering Wiki

Post by Lorgar » 22 Aug 2017, 5:56 pm

brett1868 wrote:Share price isn't totally driven by dividends but more by supply / demand based on the perception of risk vrs gain which varies per entity.


Reading my reply again I spoke a little too broadly regarding dividends part in the value of a stock. I've edited my post on that point to be CBA specific.
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Re: CBA Money Laundering Wiki

Post by brett1868 » 22 Aug 2017, 7:04 pm

All good mate, dividend has an effect of share price and is often gambled on by day traders with the largest volatility closest to financial year end.

Fining the CBA back into the stone age would be a disaster of epic proportions for our economy.

I believe they will endeavour to negotiate a politically correct fine so the government looks like it did the right thing by Joe Public and the banks bottom line isn't overly affected.
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Post by Herdsman » 23 Aug 2017, 1:57 pm

By any chance Lorgar do you have CBA shares you're hoping aren't about to take a dive? :lol:
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Re: CBA Money Laundering Wiki

Post by Lorgar » 23 Aug 2017, 2:33 pm

lol, nah. No CBA shares.

I would still potentially buy into CBA in the future though, despite all this hooplah. They're on a short term down trend at the moment, but approaching what the bottom of the undulation will be in my opinion. When it shows signs of turning around I might be tempted.

On an unrelated note though, I think everyone should go out an buy lots and lots of A2 Milk. The more the better. :lol: :mrgreen:
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Post by brett1868 » 23 Aug 2017, 2:40 pm

There's talk of an investor class action around the banks non disclosure of critical information to share holders....share prices always move around, the skill comes in knowing when to buy and when to sell :)

http://www.news.com.au/finance/business/banking/commonwealth-bank-facing-shareholder-class-action-over-money-launder-allegations/news-story/d2539c480132162a90eb9ebe411ba54a
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Post by Lorgar » 24 Aug 2017, 10:59 am

Yep, I'm aware.

This isn't the first time that's happened over stock prices either.

There have been 40 something of these types of class actions over recent the years, and 0 rulings. These companies all have liability insurance, and in every case they have settled before it reached a ruling.

CBA will have a few hundred million in liability insurance, if it reaches that point they'll settle for their maximum policy coverage and it's the insurer who will pay.

There will be a bit of an emotional stock price roller coaster, a bit of time will go by, then people will look at the fundamentals of the business again and the price will rise again. The bank rolls on.

I'm not buying CBA shares today, but they will be a decent investment again in time.
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Post by Member-Deleted » 26 Aug 2017, 7:21 pm

Come on guys,over the years there is 4 untouchable things in Australia,
1.Imigration
2.Developers
3.Horse racing
4.Commonwealth bank.
:sarcasm: :crazy: but true..
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Re: CBA Money Laundering Wiki

Post by Lorgar » 06 Sep 2017, 2:49 pm

Shares down to $73~ from $78~ since topic was posted.

If they get to $70 I'd say they're going to start sparking the interest of a lot of investors.
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