The Australian Securities and Investments Commission has taken action against Macquarie Bank for failing to adequately monitor and control transactions by third parties, including financial advisers.
The regulator commenced civil proceedings as it alleged there was “limited monitoring” of transactions made through its bulk transaction system and that these transactions did not pass through a fraud monitoring system or undergo manual checks.
ASIC alleged from 1 May, 2016 to 15 January, 2020, Macquarie failed to take measures to prevent or detect transactions made using its bulk transacting system that were outside the scope of a ‘fee authority’ given by a customer, including misappropriating, and attempts to misappropriate, customer funds.
This included $2.9 million in unauthorised withdrawals made by convicted former financial adviser, Ross Andrew Hopkins.
Hopkins made 167 unauthorised transactions between October 2016 and October 2019 on 13 of his clients’ cash management accounts via Macquarie’s bulk transaction system. He was later sentenced to six years imprisonment and banned from providing financial services or controlling an entity carrying on a financial services business.
Following engagement with ASIC, from December 2021, Macquarie remediated Hopkins’ clients approximately $3.5 million on an ex-gratia basis.
ASIC also claimed Macquarie made false or misleading representations in the promotion and offering of limited third-party access over cash management accounts.
ASIC deputy chair, Sarah Court, said: “Hopkins misused Macquarie’s systems by processing transactions using his fee authority to steal client funds. Macquarie failed to properly detect and prevent these unauthorised fee transactions, many of which were over $10,000 each. Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes.
“ASIC’s case is not focused on Hopkins’ conduct but rather on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions.”
The regulator said it was seeking declarations, pecuniary penalties and other relief from the Court, including a compliance order for an independent review of Macquarie’s fee authorities and fee transactions using its bulk transaction system to ensure recommendations regarding improvements are effectively implemented.
