ASIC Is Suing Macquarie Bank over Unauthorized Withdrawals

The Australian Securities and Investments Commission (ASIC) is suing Macquarie Bank Ltd, which may face a hefty fine.

ASIC accuses Macquarie over its cash management accounts, which allowed third parties to access the accounts such as financial advisers.

Ross Andrew Hopkins, a convicted financial advisor succeeded in withdrawing $2.9 million by exploiting the Macquarie system. According to the allegations, the transactions were made via the bulk transaction system using a fee authority.

The transactions through the fees system were not manually checked and were not filtered through a fraud monitoring system. Rather than collecting fees, the ex financial advisor withdrew funds from customers' accounts under his management.

Hopkins pleaded guilty to fifteen offences, resulting in $2.9 million in unauthorized withdrawals. Macquarie bank compensated Hopkin's customers with $3.5 million (approx.).

ASIC Allegations

ASIC claims that from May 2016 to January 2020 Macquarie failed in monitoring the bulk transactions system. In addition, ASIC alleges Macquarie's promotions of limited 3rd party access to cash management accounts were misleading.

source: ASIC

Sarah Court, the Deputy Chair at ASIC, said, "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 unauthorized fee transactions, many of which were over $10,000 each. 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 unauthorized transactions."

Macquarie’s spokeswoman responded to the ASIC allegations. “ASIC’s court filing notes that this issue arose in relation to 13 clients of an independent financial adviser between 2016 and 2019, who has since pleaded guilty to fraud.

"Following the independent adviser’s failure to compensate his clients for their losses, Macquarie fully reimbursed the 13 clients. Macquarie treats the security of its clients’ accounts with the utmost seriousness, and has continued to introduce new controls and processes to respond to the evolving external fraud environment.”

The penalty, which will be decided by the court may be as high as 3 times the amount (around $19 million). Another possible scenario is a percentage of turnover, which may exceed $500 million.

Furthermore, action was recently taken against Mark Babbage by ASIC.