Macquarie in court over alleged failures to monitor $2.9m in unauthorised withdrawals

Macquarie in court over alleged failures to monitor $2.9m in unauthorised withdrawals

Australia’s corporate watchdog has commenced Federal Court proceedings against Macquarie Bank, alleging it failed to monitor transactions leading to $2.9 million in unauthorised withdrawals from customer accounts.

The Australian Securities and Investment Commission (ASIC) alleges there was limited monitoring by Macquarie of transactions made through its bulk transaction system using a ‘fee authority’, and the transactions did not pass through a fraud monitoring system or undergo manual checks to confirm the transactions were for fees.

It is alleged these failures meant customers were impacted by $2.9 million in unauthorised withdrawals by Ross Andrew Hopkins, a former financial advisor who was sentenced to six years imprisonment in 2021 after being convicted of 15 dishonesty offences under the Corporations Act.

“Mr 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,” ASIC deputy chair Sarah Court said.

“Mr 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 Mr Hopkins’ conduct but rather on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions.”

The allegations cover a nearly four year period to 15 January 2020, during which ASIC says Macquarie failed to take measures to prevent or detect transactions made that were outside the scope of a ‘fee authority’ given by a customer.

As such, ASIC says these failures mean the bank, a subsidiary of Macquarie Group (ASX: MQG), breached its obligations as a financial services provider to ensure its financial services were provided efficiently, honestly and fairly.

In addition, the watchdog claims Macquarie made false or misleading representations in the promotion and offering of limited third-party access over cash management accounts.

In particular, ASIC claims that where a customer gave ‘fee authority’ to a third party, Macquarie represented that it would check that any transaction made under it was actually for fees, when it did not.

The watchdog is seeking declarations, pecuniary penalties and other relief from the Court, including a compliance order for an independent review of the bank’s fee authorities and fee transactions using its bulk transaction system to ensure recommendations regarding improvements are effectively implemented.

Shares in MQG are up 0.34 per cent to $206.77 per share at 10.22am AEST.

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