New Zealand’s Reserve Bank – Te Pūtea Matua (RBNZ), the country’s central bank and financial regulator, has launched civil proceedings in the Wellington High Court against The Co-operative Bank, a customer-owned retail lender, over three separate breaches of its anti-money laundering obligations stretching back at least five years.
The bank has admitted liability across all three causes of action, and both parties have put forward a joint recommendation to the court that a penalty of $1.425m is appropriate, though the final determination rests with the judge.
The RBNZ’s case centres on the adequacy of The Co-operative Bank’s anti-money laundering and countering financing of terrorism (AML/CFT) programme. Specifically, the regulator alleges the bank failed to ensure its transaction monitoring rules were all functioning correctly, did not carry out sufficient assurance testing to verify whether its account and transaction monitoring was operating effectively, and failed to keep adequate records of both activities as required under its own AML/CFT programme.
As a consequence of these shortcomings, the bank did not identify higher-risk transactions and customers, did not carry out timely enhanced due diligence, and fell short of the record-keeping standards demanded by law. The RBNZ has been clear that it is not alleged The Co-operative Bank was itself complicit in money laundering or the financing of terrorism.
The Co-operative Bank is one of New Zealand’s smaller registered banks. Founded in 1928 as the Public Service Investment Society before becoming a registered bank in 2011, it operates as a co-operative owned by its customers and offers everyday banking, savings, loans, insurance, and small-business banking throughout New Zealand.
The enforcement action is notable for being the RBNZ’s second AML/CFT civil proceeding against a reporting entity within six months, reflecting a more assertive supervisory posture. From 1 July 2026, oversight responsibility for all New Zealand reporting entities will transfer to a single regulator: the Department of Internal Affairs (DIA). The DIA has confirmed its support for the action and will assume conduct of the proceeding from that date.
RBNZ acting assistant governor of financial stability Angus McGregor said, “This is the second AML/CFT civil proceeding the RBNZ has filed against a reporting entity in the last six months. This enforcement response promotes the AML/CFT Act’s purposes, which are to detect and deter money laundering and the financing of terrorism; maintain and enhance New Zealand’s international reputation; and contribute to public confidence in the financial system.”
He added, “This action again reinforces that prolonged and systemic failures to meet core AML/CFT obligations are serious and unacceptable.”
McGregor also said, “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.”
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