Why the NAB share price fell sharply on Monday

Issues emerge

The National Australia Bank (ticker: NAB) saw its share price fall sharply after it was revealed that AUSTRAC had raised a number of concerns with the bank’s anti-money laundering (AML) and Counter-Terrorism Financing (AML/ CTF) program.

This issue raised by the regulator focuses on the bank’s customer identification procedures, customer due diligence practices, and some other issues. These issues were described as both potentially serious and noted as being ongoing.

Despite the understandably negative reaction from the market, AUSTRAC made the clear point that it was currently 'not considering civil penalty proceedings to address’ the concerns raised. This line was highlighted in bold.

Such a decision, NAB stressed and AUSTRAC elaborated, is ‘reflective of the work undertaken by the NAB DBG to date.'

This position, the regulator did point out, may change.

While potentially damaging for the bank, NAB has flagged these issues in the past, disclosing them as early as 2017 as well as during the most recent interim results.

Beyond merely identifying these issues, NAB looks to be taking proactive steps to correct them, flagging that it had thus far invested approximately $800 million to improve its financial crime and fraud controls.

The bank has also regularly engaged with AUSTRAC over these matter, stressing that its focus is on addressing and improving its AML/ CTF Program.

Commenting on the situation, NAB Chief Executive, Ross McEwan noted that the bank is focused on cooperating with the regulator, while adding:

'NAB takes its financial crime obligations seriously. We are very aware that we need to further improve our performance in relation to these matters. We have been working to improve and clearly have more to do.'

'NAB has an important role in monitoring and reporting suspicious activity and keeping Australia's financial system, our bank and our customers safe.'

The NAB share price finished out the session down 3.16% or 87 cents, at $26.64 per share off the back of this news.

Despite that pronounced reaction, NAB has been in a clear uptrend over the last 6-months, rising 14% in that period.

Besides NAB – CBA, ANZ and WBC all drifted lower on Monday, as investors cool on the sector.

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A regulator on the offensive

AUSTRAC on Monday also announced it was investigating Crown and SkyCity, marking a busy day for the regulator.

The Crown share price (ticker: CWN) fell sharply during the session, finishing Monday down 1.50% to $12.50 per share.