Live: Bank of America fined $US1.2 billion for anti-money laundering failures

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A great story on trust taxation from my colleague at Parliament House, Tom Crowley.

But one line in it really jumped out at me, and it's similar to a line commonly found in stories about trusts:

"But business lobbies and the opposition have argued discretionary trusts are used for a range of legitimate purposes, including by small business owners."

But what, exactly, are these so-called "legitimate purposes" beyond tax minimisation?

Here's what tax expert Dale Boccabella, Associate Professor of Taxation Law at the University of NSW, told Radio National Breakfast the other day.

"These are sort of destructive type of vehicles — and I don't know why the judges keep accepting they're OK as part of our general law," he told Sally Sara.

"Anyone who has been in a family relationship breakdown and had to go to the Family Court, where there's a discretionary trust involved, will know very well how destructive these things can be.

"They can be used to cheat a divorcing spouse out of their just and equitable property division on relationship breakdown."

Sometimes businesses use trusts as an extra layer of asset protection against their creditors.

"I hear business talk about the word 'asset protection', but there's a downside to asset protection — someone's not getting paid," he said.

"Suppliers to a small business, if the business goes pear-shaped, they're not going to get paid."

Sometimes one person's "legitimate purpose" infringes or limits another person's legitimate legal rights.

The question this raises is not so much about the appropriate tax treatment of discretionary trusts, but whether most of them should be allowed to exist at all.

Australia’s largest bank is bracing for hard questions from investors at its annual general meeting, kicking off this morning.

Investors of the Commonwealth Bank of Australia will be wanting to know the company’s strategy on its mortgage lending, which has been weighing on its share price.

The CBA revealed at its August results it had experienced a 15% drop in mortgage applications since the federal budget was released on May 12.

It posted a $10.9 billion profit earlier this year and investors will be receiving a $2.70 dividend per share.

Among the other key issues for CBA shareholders is the bank’s approach to deforestation, with some investors earlier this month calling for it to stop funding companies linked to deforestation projects.

Chief executive Matt Comyn will be fronting investors, with questions expected to be asked around succession plans as he passes eight years in the top job.

Eager investors of Australia’s second biggest company are milling about sipping tea and coffee in the Hyatt Regency Ballroom with iconic black and yellow branding covering the walls.

One man said he invested in CBA when it first floated on the stock market back in 1991 at $5.40 a share.

CBA is now trading around $154 a share.

The Housing Industry Association is criticising a federal government proposal to place a minimum tax on family trusts.

It says doing so would amount to a new tax on tradies, builders and small family businesses:

"For many Australians, a family trust may sound like a structure reserved for wealthy investors. In reality, family trusts are a common and legitimate way for tradies, builders and small family businesses to operate," HIA Managing Director Jocelyn Martin said.

HIA says 60% of their members operate through family trusts and the proposal would create costly business disruptions for them, diverting their attention "from building the homes Australia desperately needs".

"Family trusts are a practical and longstanding business structure that helps builders manage risk, protect assets, plan for succession and operate sustainable family-run businesses."

Abdulrahman Alfozan, 35, had worked as an engineer at OpenAI since July 2025, the Justice Department has said in a statement.

OpenAI discovered the recording device plugged into a USB port on the back of a television in an executive conference room at one of its San Francisco buildings on September 30, according to the department.

The thumb-sized device, which had a microphone and could connect to a camera, was concealed in toilet paper, according to the FBI complaint. It was installed on or about September 28, while its stored data was encrypted and inaccessible. Investigators later found a similar customised device in Alfozan's personal bag.

"Abdulrahman Alfozan allegedly concealed a covert recording device inside his employer’s executive conference room to secretly capture sensitive communications about the company’s super intelligence technology," FBI Director Kash Patel said in a statement.

Alfozan also used an AI productivity agent to seek information about meeting-room calendars and capabilities for about a month through September 16, according to the FBI complaint. He has been a legal permanent resident of the US since September 2020.

If convicted, Alfozan faces up to five years in prison, a $250,000 fine and three years of supervised release.

Alfozan studied at the Massachusetts Institute of Technology and the University of California, Berkeley, according to his LinkedIn profile. He previously worked at Meta and Microsoft.

Customers, advocates and activists will demonstrate outside Origin Energy’s Annual General Meeting in Sydney this morning, accusing the company of giving customers "bill shock" and constantly pushing up bills, forcing customers into energy debt.

Kristin O’Connell, Stop The Bill Shock campaign spokesperson and Antipoverty Centre co-coordinator, said:

Origin Energy has been making absolutely obscene profits over the past four years while failing to do anything to make bills affordable and provide relief to customers who are trapped in debt. Instead, they keep taking every opportunity to increase power prices and bank the savings from renewables to boost their profits and their executives’ bonuses. While at the same time, thousands of their customers are struggling to afford essentials like food, housing and healthcare.

The ABC has reached out to Origin Energy for a response.

The Treasury has released a detailed statement of what it alleges against America's second-largest bank.

It says the bank was given a cease-and-desist order requiring it to repair its anti-money laundering program as far back as December 2024 but not enough was done.

According to the regulator, more than a year later the bank was still failing to escalate potentially suspicious activity to investigators and it had a persistent systemic gap in its monitoring.

The OCC said the bank's monitoring system failed to properly monitor trillions of dollars in transactions, and that the bank knew for years it was not escalating suspicious activity. It also alleged that key personnel were not adequately trained.

FinCEN said compliance staff escalated concerns about potential ties to narcotics proceeds, but the bank did not respond in a timely or meaningful way.

There were 475 apparent violations involving Russia, Belarus, Iran, Burma, Somalia, narcotics and global terrorism.

In terms of what happens now, BoA must work with a third party to look back over past transactions and report suspicious activity that went undetected. Documents will also be submitted that will test the program against three priority risks: the southwest border, cartels and potential drug trafficking; Iran; and Russia.

Treasury used the announcement to send a message to the rest of the industry. It said institutions cannot rely on law enforcement inquiries or referrals from other banks as a substitute for their own controls. They're also looking for whistleblower tips and offering awards.

Key Event

The Australian Securities and Investments Commission (ASIC) has called on directors and auditors of super funds and major companies to lift their game when it comes to valuing asset and be more transparent when they write off investments.

ASIC's second review into the financial reporting and audit of superannuation funds (for 2025-26) looked at 42 registrable superannuation entity (RSE) financial reports and six audits.

Accurate investment valuations directly affect members' account balances, reported investment returns, fees charged and retirement outcomes.

But ASIC found persistent concerns around valuations of unlisted investments.

"Millions of Australians entrust superannuation trustees with their retirement savings," ASIC Commissioner Kate O'Rourke said.

"It's imperative those investments are valued accurately, and auditors provide effective scrutiny to detect any unreliable investment valuations."

Business is down in the dumps with the NAB's September business survey showing confidence is now well below its long-run average. Economic uncertainty — both locally and offshore — is weighing on boss's minds, but they're also copping ever-rising costs. And, economists say, if costs pressures continue to build in the economy, the RBA will have little choice but to raise interest rates again on Melbourne Cup Day.

Sally Auld is the NAB's chief economist.

US federal agents arrested a Saudi national employed as an OpenAI engineer and charged him with installing a hidden audio recording device in an executive conference room at the AI company, the Justice Department said.

OpenAI had used its internal AI models to identify the individual responsible for planting the device and to trace its origins, it said in an X post:

"At this time, we have no indications of this individual inappropriately accessing or exfiltrating model weights, source code, or customer data. The employee was terminated."

The company said it referred the matter to the FBI, which is continuing to investigate.

OpenAI faces scrutiny over security incidents involving its AI systems. Reuters and other outlets recently reported that the company told investors its annualised revenue for September was almost $50 billion, down from what it had signalled earlier.

OpenAI said on Friday it fired three researchers after an investigation found they had violated company policies on handling sensitive information.

The statement came after the researchers, Jasmine Wang, Tomek Korbak and Mikita Balesni, published a letter detailing the circumstances of their dismissal and arguing that the abrupt firings could create uncertainty among employees and undermine a culture that had allowed researchers to raise safety concerns.

It comes as more than 300 scientists from across the Americas, Europe, Asia, Africa and Oceania call for greater AI safety measures in an open letter.

With Reuters

Key Event

The US Justice Department said that a Saudi national had been arrested for allegedly installing a hidden audio recording device at OpenAI in San Francisco.

Here's OpenAI's statement, which has been remarkably spun into something of an advertisement. Also, it appears the company reported this spying faster than its previous reporting to the Australian government:

Key Event

Bank of America has been fined $1.21 billion by the US government for what it called widespread failures to properly police potential money laundering and other illicit activity at the nation's second-largest bank.

The Treasury Department said the fine, the third-largest in department history, is due to the bank's failure to report over $5 billion in suspicious activity to the government, including $1 billion in activity that posed national security-related and other priority illicit finance risks.

“Financial institutions are on the front lines of protecting our economic and national security. When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls, exposing the entire US financial system to significant illicit finance risks," said Treasury Secretary Scott Bessent.

The Treasury said the bank "prioritized its revenues" in building compliance programs, and overly relied on inquiries from outside parties like law enforcement and other financial institutions instead of its own internal controls.

“Financial crime compliance is serious, and we are responsible for getting it right," said a Bank of America spokesperson in a statement. "We have invested billions of dollars in technology and dedicated thousands of employees to combat financial crime, and our team is far along with and committed to completing the work required to address the issues raised by our regulators."

The spokesperson added that the bank's third-quarter results due for release on Wednesday will include a non-tax-deductible charge of $1.2 billion, which will reduce quarterly net income by approximately 17 cents a share. Shares were down 1.8% in after-hours trading.

As part of the fine, the Office of the Comptroller of the Currency levied a $750 million civil penalty against the lender, the largest ever for the regulator.

The regulator said the bank's compliance program was "deficient and ineffective," and its transaction monitoring system caused the bank to delay in filing suspicious activity reports on billions of dollars of transactions.

In addition, the bank paid an $11.6 million fine to the Office of Foreign Assets Control for over 400 apparent violations of numerous sanctions programs. The Treasury said the bank mistakenly processed millions of dollars in payments that violated sanctions programs targeting countries including Russia and Iran.

The fine comes days after American Express was also hit with a $350 million penalty for similar anti-money laundering shortcomings.

With Reuters

Good morning, selamat pagi and buenos dias!

The S&P500 was flat, Nasdaq and Dow Jones slightly in the red. It was a similar look in Europe and London trading.

Investors are digesting a host of banking results - while we're hearing the Bank of America faces $1.2 billion fine for allegedly violating money laundering and sanctions laws.

And the Kospi's decline yesterday sending waves across Wall Street's listed chip stocks as well.

Lots to get into so fire up that coffee maker and let's get cracking