Commonwealth Bank of Australia has blamed a software \u2018coding error\u2019 for the \u2018vast majority\u2019 of the anti-money laundering and counter-terrorism (AML\/CT) financing law breaches it was accused of by AUSTRAC last week.\nThe Australian Transaction Reports and Analysis Centreinitiated civil penalty proceedings in the Federal Court against CBA on Friday, for \u2018serious and systemic non-compliance\u2019 with AML\/CT laws.\nAUSTRAC\u2019s action alleges more than 53,700 contraventions, which concern the banks use of intelligent deposit machines.\nWith the maximum fine for each breach at $18m, the bank faces a potential payout of nearly a trillion dollars \u2013 around seven times its market value.\nAUSTRAC says the bank failed to provide 53,506 threshold transaction reports for cash transactions of $10,000 or more during a three year period, accounting for a total value of around $624.7 million, the agency said.\nThe bank also failed to assess the AML\/CT risks of intelligent deposit machines before they were rolled out in 2012, or in the following three years.\nCBA failed to monitor transactions on 778,370 accounts, in accordance with its own AML\/CT requirements, and failed to report suspicious matters either on time or at all involving transactions totalling more than $77 million, AUSTRAC alleges.\n \nEven after CBA became aware of suspected money laundering on its accounts, the bank failed to monitor those customers or take action. AUSTRAC says. This is despite NSW Police telling the bank it was investigating a 'cuckoo smurfing' syndicate, which was laundering money through CBA accounts.\nResponding to the allegations this morning, CBA said that when its intelligent deposit machines were first rolled out in May 2012, they provided the necessary threshold transaction reports, until a software update later that year.\n\u201cThe issue began after an unrelated software update to the IDMs in late 2012. Following the software update, a coding error occurred which meant the IDMs did not create the TTRs needed,\u201d the bank said in a statement.\n \n\u201cThis error became apparent in 2015 and within a month of discovering it, we notified AUSTRAC, delivered the missing TTRs and fixed the coding issue.\u201d\n \nMost of the reporting failures alleged by AUSTRAC relate \u201cspecifically to this coding error\u201d, the bank said, adding that it recognised there were other allegations that didn\u2019t relate to the TTRs.\n \nCBA said it would file a statement of defence.\nMistakes\nIt is the latest is a string of scandals to rock Australia\u2019s biggest bank. \n\u201cIn an organisation as large as Commonwealth Bank, mistakes can be made. We know that because we are a big organisation, these mistakes can have significant impact,\u201d the bank said in a statement.\n \n\u201cWe need to be ever more vigilant in the area of financial crime and anti-money laundering. The rapid evolution of technology in banking, the increased sophistication of criminal activity, and higher regulatory expectations together create an imperative to continuously raise our standards."