Macquarie Bank fined $6.4 million by Australia for failing to stop illegal third-party transactions

The Federal Court of Australia has levied a A$10 million ($6.4 million) fine against Macquarie Bank for its inadequate controls in identifying and preventing unauthorised fee transactions carried out by third parties on customer accounts, as stated by the securities regulator on Friday.

According to the Australian Securities and Investments Commission (ASIC), the bank permitted customers to grant different levels of transaction authority to third parties, such as financial advisors and stockbrokers, including the authority to withdraw fees.

Macquarie Bank facilitated third parties with a bulk transacting tool to execute multiple withdrawals across numerous customer accounts concurrently. However, between May 2016 and January 2020, it neglected to establish controls to monitor whether third-party bulk transactions under fee authority were genuinely for fees.

Acknowledging its failure to meet a statutory obligation in this aspect, Macquarie Bank stated it had implemented effective controls as of January 2020. Nonetheless, these earlier shortcomings enabled financial adviser Ross Hopkins to fraudulently withdraw approximately A$2.9 million from his clients’ accounts without detection by Macquarie.

ASIC Chair Joe Longo highlighted Hopkins’ fraudulent activities, noting his six-year imprisonment in 2021 for misappropriating clients’ funds, all of which were conducted using Macquarie Bank’s bulk transaction system.

Macquarie Group, the bank’s controlling entity, confirmed full reimbursement to the 13 affected clients following the financial adviser’s failure to compensate them for their losses. The bank has agreed to pay the fine imposed by ASIC.