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NAB facing money laundering penalties

Alex Druce
NAB says it may have breached laws governing bribery, corruption and financial crime

National Australia Bank has admitted it faces the prospect of further remediation and a huge fine for multiple possible breaches of counter terrorism and anti-money laundering laws.

The lender said in its annual report on Friday it may have been involved in a breach or alleged breach of laws governing bribery, corruption and financial crime, and that it has provided documents and information to the financial intelligence watchdog.

NAB says it was unsure how deeply the issue had run and how significant any AUSTRAC penalty would be.

Commonwealth Bank was fined a record $700 million fine in 2018 for serious breaches of the same laws, while Westpac has also flagged potential penalties as its work with AUSTRAC continues.

NAB said it had self-reported "a number" of issues to AUSTRAC, and was currently investigating and remediating a number of counter terrorism and anti-money laundering breaches.

It said issues included certain weaknesses with the implementation of 'Know Your Customer' requirements, other financial crime risks, as well as systems and process issues that impacted transaction monitoring and reporting in some specific areas.

The bank accepted any confirmed wrongdoing would further harm its reputation and bottom line, both of which have already copped a hiding in the wake of misdeeds uncovered by the financial services royal commission.

"The potential outcome and total costs associated with the investigation and remediation process remain uncertain," the bank said in its annual report.

"Given the large volume of transactions that the group processes, the undetected failure of internal AML/CTF controls, or the ineffective implementation or remediation of compliance issues, could result in a significant number of breaches ... and significant monetary penalties."

Shares in the bank had dipped by 1.26 per cent to $27.45 by 1125 EDT on Friday.