Australia’s Federal Court has fined Macquarie Bank A$10 million over its lack of prevention for third-party transactions.

In a statement, the Australian Securities and Investments Commission (ASIC) said that the bank lacked effective controls to prevent and detect unauthorised fee transactions conducted by third parties, such as financial advisers, on customer cash management accounts using Macquarie’s bulk transacting facility.

It added that the bank enabled its customers to give third parties, such as financial advisers, stockbrokers and accountants, different levels of authority to transact on their accounts, including a limited authority to withdraw the third party’s fees. Macquarie also made available to third parties a bulk transacting tool to make multiple withdrawals across multiple customer accounts simultaneously.

The ASIC found that between 1 May 2016 and 15 January 2020, Macquarie failed to implement effective controls to monitor whether third party bulk transactions under the fee authority were actually for fees.

While it initially defended the proceeding, the bank later admitted that it contravened its obligation to provide its financial services efficiently, honestly and fairly and agreed to pay the fine.

ASIC chair Joe Longo said: “Fraud controls are increasingly important and this case sends an important message to financial institutions and other financial service licensees that they must have appropriate controls in place.

“While Macquarie implemented effective controls from January 2020, its earlier failures meant that financial adviser Ross Hopkins was able to fraudulently withdraw around A$2.9 million from his customers’ accounts without being detected by Macquarie”

Hopkins, currently serving a six year prison sentence after being found guilty of misappropriating client funds, made transactions using Macquarie’s bulk transaction system. The bank said that it had fully reimbursed the 13 clients who were affected by Hopkins failed to compensate them for their losses.

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