The Commonwealth Bank accused of money - MyAssignmenthelp.com

Question: Discuss aboutThe Commonwealth Bank accused of money. Answer: Corporate Legal Issues faced by Crown Resorts: It is the duty of the directors of corporate enterprises to act in the best interest of the company. According to the provisions of Section 180 (1) of the Corporation Act 2001 (Cth) the directors and other officials of the company are instructed to take due care and diligence in relation to their operational activities. In this regard, a hypothetical person has been appointed as a director in order to evaluate the depth of such care and diligence and thereby the reasonability is analyzed keeping in mind the depth of the decision[1]. The decision taken must be according to the interests of the company. In a recent case of ASIC v Cassimatis[2], it was held hat in any condition a reasonable director will not cause breach of the provisions of law. It is mandatory to follow the law of the land and failure to do to will give rise to serious consequences. The shareholders in general do not have the authority to ratify the acts mentioned above. In the given scenario, the directors of crown s ports have violated statutory provisions by sending various agents to China for the recruitment of high roller gamblers[3]. Gambling is highly illegal in China. The government of China took reasonable steps to arrest the employees of the organization which also included Australians. There has been a decline in the shares of the organization by 14% which subjected to major loss which was faced by the company and its shareholders. In this regard it can be observed that the reputation of the company suffered huge loss as a result of its actions. In the given scenario, the legal issues of any corporate which have been faced by the directors of Crown Resorts Ltd are as a result of the director duties that have been violated by them. The directors as mentioned above have breached the provisions of the Section 180 (1) of the Corporation Act 2001 by not acting with care and diligence concerning the business of the company. Role of ASIC: The Australian Investment and Security Commission is an independent government body in Australia whose purpose is associated with the regulation of companies and securities. The duty of the Australian Investment and Security Commission is to keep records on the affairs of corporate enterprises. The AISC is involved in the regulation of financial services, integrated corporate, market and consumer credit regulators in Australia[4]. The commission since time immemorial has targeted economic growth by allowing the markets to fund economy. In order to ensure the financial stability in Australia, the AISC has played significant role. The AISC have proved to be beneficial in promoting the level of confidence and trust among consumers and investors, ensuring efficiency of markets by providing proper registration services in the long run. The ASIC has played significant role in bringing action against the organizations which failed to act ethically and legally and thereby caused serious loss to the investors and creditors. If any violation has been identified in any case, then in such cases the ASIC seeks orders like financial penalties and suspension of directors. In the given scenario, it can be observed that the employees of Crown Resorts have been arrested in China due to the illegal activities committed by it[5]. In this context, it is the role of ASIC to investigate into the matter seriously. In this regard, it can be stated that such decision taken by the directors may cause serious loss to the company including its investors and creditors. It is the duty of Australian Investment and Security Commission to make investigation into the matter in cases where any company is registered with the Australian Stock Exchange (ASX) has been accused of violating the provisions of law. In the given scenario, if it comes to the findings of ASIC that the directors of Crown Resort have violated their duties of corporation it will seek reasonable action against the company in Au stralia. Possible Remedies: If it comes to the knowledge of ASIC upon proper investigation that the directors of Crown Resort have actually involved in illegal activities and therefore various remedies are available according to the provisions of the Corporation Act 2001. The violation of duties of directors as provided in the Corporation Act 2001 is a civil penalty provision. In this regard, the directors can be prosecuted under criminal liability under the criminal code according to the provisions of Section 61, if it is found that they have violated the provisions of Section 184 of the Corporation Act 2001 which is to recklessly breach the duties as contained in Section 180 to 183 of the Corporation Act 2001. The provisions of civil penalty are contained in Section 1317E of the Corporation Act 2001. In case of serious breach of duties the directors may be subjected to financial penalty up to A$200, 000. According to the provisions of section 206C of the Corporation Act 2001, may be suspended from managing a corporation in the future which is for a period up to five years[6]. In such cases the directors may seek an alibi under the provisions of Section 1317G and the court may pardon the breach of duties committed by them[7]. However, it is required that AISC should prove that a serious breach has been committed by the directors in relation to their duties. In Australian Securities Investments Commission [ASIC] v Lindberg[8], it was held that ASIC was successful in obtaining suspension of two years along with a penalty of $100,000 where the directors have violated the provisions of Section 180 (1) of the Corporation Act 2001. In such cases, directors have an opportunity of outside settlement in relation to the penalties that has been prescribed. The ASIC had to prove such cases in the Court. The Commonwealth Bank have suffered huge decline in its share price after a case was filed by AUSTRAC against such organization for money laundering[9]. The organization has been subjected to a potential class of action by the shareholders as a result of such incident. Allegation was brought against the organization by AUSTRAC due to the reason that they have been associated with money laundering operations by terrorist groups and criminals. The CBA was accused to have conducted breaches in relation to the rules of money laundering and counter-terrorism financing. A proceeding of civil penalty has been initiated by the AUSTRAC in the federal court of justice against the Commonwealth Bank for consequences of serious and systemic non-compliance. The Australian community has been subjected to serious and ongoing financial crime as a result of the conduct of the CBA which was provided by the court. However it was provided by the bank that they would not involve in any such illegal activities in the future which would authorize crime of any kind. An issue was brought before the Court of Justice because the bank was unsuccessful to report matters of suspicion in relation to transaction over A$77 million. In this regard, the agency alleged that 53,000 contraventions of anti-laundering laws and counter-terrorism laws are made by the Commonwealth bank particularly to its intelligent deposit machines. A maximum amount of A$18 million can be imposed for the violation of anti-laundering and counter terrorism policies. The banks did not take necessary steps in order to manage and mitigate risks in cases here machines were used for suspected money laundering as stated by the AUSTRAC. The AUSTRAC alleged that four money laundering syndicates utilized the machines which were associated with drug import and distribution network. In order to keep suspicion at bay, the machines had been used by the money laundering syndicates in depositing and transferring cash at low amounts. It was observed that of the money laundering activities involved more than 21m deposited into 11 CBAs which was due to the outcome of intelligent machines[11]. The bank in such case failed to take any action even after repeated warnings by the Australian Federal Police. The Australian Investment and Security Commission are regarded as the corporate masterpiece in Australia whose duty is to keep an eye on the affairs of the government. The regulation of integrated corporate, financial services, markets and consumer credit in Austral ia is regulated by the ASIC. The purpose of ALIC is to promote financial stability in Australia. The vision of the commission since time immemorial was to allow the markets to fund economy and trigger economic growth. In order to promote the level of confidence and trust among consumers and investors, the ASIC has proved to be efficient[12]. Organizations which fail to act in a legal and ethical manner by causing loss to the creditors and investors; ASIC has been successful in bringing action against such organizations. The ASIC has been successful in identifying the violations of law and by seeking order like financial penalties and suspension of directors. It has been observed that the directors of CBA failed to take proper care in relation to the affairs of the company. From the above discussion it is pertinent that the directors of a corporate organization are at the duty to act in relation to the best interest of the company. The provisions of Section 180 (1) of the Corporation Act 2001, provided instruction to the directors of a company to take reasonable care and diligence in relation to their operational activities[13]. In this regard, it can be mentioned that such care and diligence has been evaluated by the appointment of hypothetical person as a director in order to analyze the reasonability of such decision. In this case it can be mentioned that as the company has involved in illegal activities and caused violation of legal provisions and it can be seen that its directors have also violated the provisions of section 180(1) of the Corporation Act 2001. In the given scenario it can be observed that the present role of the AISC to investigate the issue of the matter. This is done with a purpose because the bank failed to comply with a legal du ty of disclosure and has acted with diligence and care according to their operational activities which any responsible director would have done in the given scenario. The organization along with the directors would be subjected to prosecution as a result of the breach of directors duties committed by them[14]. It can be stated that under the provisions of civil penalty the directors may be made personally liable for the payment of financial penalties after being suspended for managing the affairs of the company under the provisions of Section 1317E and 206C of the Corporation Act 2001. Bibliography: 'ASIC To Investigate CBA Over Money-Laundering Scandal' (ABC News, 2018) https://www.abc.net.au/news/2017-08-11/asic-to-investigate-cba/8796542 accessed 6 January 2018. CBA faces 'very large' shareholder action on money laundering. (2018). ABC News. Retrieved 3 January 2018, from https://www.abc.net.au/news/2017-08-23/commonwealth-bank-faces-shareholder-class-action/8833860. CBA will take months to answer money laundering allegations. (2018). ABC News. Retrieved 3 January 2018, from https://www.abc.net.au/news/2017-09-04/commonwealth-bank-will-take-months-to-respond-to-austrac/8869706. Knaus, C. (2018). Commonwealth Bank accused of money laundering and terrorism-financing breaches. the Guardian. Retrieved 3 January 2018, from https://www.theguardian.com/australia-news/2017/aug/03/commonwealth-bank-accused-of-money-laundering-and-terrorism-financing-breaches. Planning News - Planning In The News (Business Collection) - Informit' (Search.informit.com.au,2018)https://search.informit.com.au/fullText;dn=658413116605352;res=IELBUS accessed 4 January 2018. 'Taking Other People's Money: Development And The Political Economy Of Asian Casinos' (TaylorFrancis,2018)https://www.tandfonline.com/doi/abs/10.1080/09512748.2014.995127 accessed 4 January 2018. [1] Corporation Act 2001 (Cth) at section 180(1) [2] (No 8) [2016] FCA 1023 [3] 'Big Gambling: The Rise Of The Global Industry-State Gambling Complex' (Taylor Francis, 2018) https://www.tandfonline.com/doi/full/10.3109/16066359.2014.929118 accessed 4 January 2018. [4] Our role | ASIC - Australian Securities and Investments Commission. (2018). Asic.gov.au. Retrieved 3 January 2018, from https://asic.gov.au/about-asic/what-we-do/our-role/ [5] 'Home, James, And DonT Spare The Horses: The Inevitability Of A Second Sydney Casino' (TaylorFrancis,2018)https://www.tandfonline.com/doi/abs/10.1080/07293682.2017.1319394 accessed 4 January 2018. [6] Corporation Act 2001 (Cth) at section 206C [7] Corporation Act 2001 (Cth) at section 1317E [8] 2012] VSC 332 [9] Knaus, C. (2018). Commonwealth Bank accused of money laundering and terrorism-financing breaches. the Guardian.Retrieved 3January 2018, from https://www.theguardian.com/australia-news/2017/aug/03/commonwealth-bank-accused-of-money-laundering-and-terrorism-financing-breaches [10] CBA will take months to answer money laundering allegations. (2018). ABC News. Retrieved 3 January 2018, fromhttps://www.abc.net.au/news/2017-09-04/commonwealth-bank-will-take-months-to-respond-to-austrac/8869706 [11] CBA faces 'very large' shareholder action on money laundering. (2018). ABC News. Retrieved 3 January 2018, from https://www.abc.net.au/news/2017-08-23/commonwealth-bank-faces-shareholder-class-action/8833860 [12] Taking Other People's Money: Development And The Political Economy Of Asian Casinos' (Taylor Francis,2018) https://www.tandfonline.com/doi/abs/10.1080/09512748.2014.995127 accessed 4 January 2018. [13] Planning News - Planning In The News (Business Collection) - Informit' (Search.informit.com.au,2018)https://search.informit.com.au/fullText;dn=658413116605352;res=IELBUS accessed 4 January 2018. [14] ABC News. (2018). ASIC to investigate CBA over money-laundering scandal. [online] Available at: https://www.abc.net.au/news/2017-08-11/asic-to-investigate-cba/8796542 [Accessed 4 Jan. 2018]. 'Big Gambling: The Rise Of The Global Industry-State Gambling Complex' (Taylor Francis, 2018) https://www.tandfonline.com/doi/full/10.3109/16066359.2014.929118 accessed 4 January 2018. ASIC v Cassimatis (No 8) [2016] FCA 1023. Australian Securities Investments Commission [ASIC] v Lindberg [2012] VSC 332. Corporation Act 2001 (Cth). 'Home, James, And DonT Spare The Horses: The Inevitability Of A Second Sydney Casino' (TaylorFrancis,2018)https://www.tandfonline.com/doi/abs/10.1080/07293682.2017.1319394 accessed 4 January 2018. Our role | ASIC - Australian Securities and Investments Commission. (2018). Asic.gov.au. Retrieved 3 January 2018, from https://asic.gov.au/about-asic/what-we-do/our-role/.