Wellington, New Zealand – The Reserve Bank of New Zealand (RBNZ) has launched civil proceedings in the Wellington High Court against The Co-operative Bank over three separate breaches of anti-money laundering obligations dating back to at least 2020.
The legal action centres on significant failures within The Co-operative Bank’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) programme under the AML/CFT Act 2009.
Three Core Breaches Identified
The Reserve Bank’s claim relates to the adequacy and effectiveness of the bank’s AML/CFT programme, specifically highlighting three critical failures:
| Breach | Description |
|---|---|
| Transaction monitoring rules | Failed to ensure all transaction monitoring rules were operating correctly |
| Assurance activities | Did not conduct adequate assurance activities to verify effectiveness of account and transaction monitoring |
| Record keeping | Failed to maintain adequate records relating to transaction monitoring and assurance activities |
As a result of these failures, The Co-operative Bank did not flag higher-risk transactions and customers, failed to carry out timely enhanced due diligence, and did not preserve records as required by law.
Bank Admits Liability
The Co-operative Bank has admitted liability across all three causes of action. Both parties have agreed to jointly recommend to the court a penalty of $1.425 million, though the final determination on the penalty rests with the court.
Angus McGregor, the Reserve Bank’s Acting Assistant Governor of Financial Stability, confirmed the bank’s admission: “The Co-operative Bank has admitted liability for all three causes of action”.
CEO Statement: No Criminal Activity Alleged
The Co-operative Bank CEO Mark Wilkshire issued a statement acknowledging responsibility while clarifying the scope of the violations:
“Importantly, there are no allegations that the Bank has been involved in money laundering, terrorist financing or any other criminal activity, or that the non-compliance has resulted in adverse customer impacts”.
Wilkshire added: “We have worked constructively with the Reserve Bank throughout this process and have taken steps to strengthen our systems and controls. We are confident that the improvements already taken, and planned for the future, significantly strengthen our compliance in this area”.
Regulatory Context and Supervisory Transition
This marks the second AML/CFT civil proceeding filed by the RBNZ against a reporting entity within a six-month period, with the previous case taken against ASB.
A significant regulatory change is approaching: from 1 July 2026, the Department of Internal Affairs (DIA) will become the single AML/CFT supervisor in New Zealand, taking over the existing supervisory roles of both the Reserve Bank and the Financial Markets Authority.
McGregor confirmed: “The DIA is supportive of the Reserve Bank’s action and will take carriage of the proceeding from 1 July 2026”.
Regulator’s Message to Banking Sector
The Reserve Bank used this enforcement action to send a clear message to the broader banking industry:
“This action again reinforces that prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable”.
McGregor emphasized: “The RBNZ expects all banks to have appropriate systems and resources in place to actively monitor customer accounts and transactions, supported by fit for purpose testing and assurance to fully comply with the requirements of the Act. These measures are essential to identify and mitigate potential money laundering or terrorism financing risks in a timely manner”.
The enforcement response supports the AML/CFT Act’s purposes: to detect and deter money laundering and terrorist financing; maintain and enhance New Zealand’s international reputation; and contribute to public confidence in the financial system.
About The Co-operative Bank
The Co-operative Bank is a New Zealand-registered bank and member-owned financial institution offering retail banking products and services to its customers.
RBNZ Will Not Comment Further
As the matter is now before the High Court, the Reserve Bank stated it will not be making any further comment at this time.
Industry Implications
This case highlights the increasing regulatory scrutiny on banking compliance programmes in New Zealand. The $1.425 million recommended penalty represents a significant financial consequence for AML/CFT failures, even when no actual money laundering or terrorist financing is alleged.
The case also demonstrates the regulator’s willingness to pursue civil proceedings against reporting entities that fail to meet core AML/CFT obligations, reinforcing that compliance is not optional but a fundamental requirement for operating in New Zealand’s financial system.
Next Steps
The Wellington High Court will now determine the final penalty amount, as the jointly recommended $1.425 million is not binding on the court. From July 2026, the Department of Internal Affairs will assume full responsibility for conducting the proceedings.
The banking sector will be closely watching the court’s decision, as it may set a precedent for future AML/CFT enforcement actions in New Zealand.