Macquarie Bank Limited · Governance finding · severity 3 of 5
On 19 April 2024 the Federal Court ordered Macquarie Bank to pay an A$10 million penalty, agreed with ASIC, for failing to have effective controls to prevent and detect unauthorised fee withdrawals made by third parties through its automated bulk transacting facility for cash management accounts. Per the court, the facility let financial advisers and other intermediaries withdraw from many customer accounts at once by uploading a data file; threshold email alerts were generated but not systematically reviewed. As a result Macquarie did not detect 167 fraudulent transactions by one adviser between October 2016 and October 2019, causing customer losses of at least A$2,938,750. Macquarie admitted the contravention. The system was automated and not described as AI.
Record last reviewed Oct 21, 2026 · Markdown
Date
Apr 19, 2024 · disclosed Apr 19, 2024
Institution
Macquarie Bank Limited
Country
Australia
AI system
Bulk transacting facility · Automated online facility that processed uploaded data files of fee withdrawals across many customer accounts at once, with threshold-based email alerts; not described as AI
AI?
Automated system not described as AI
The system was automated, but neither the institution nor a regulator described it as AI; it is listed because it is routinely discussed as an AI failure.
Category
Status
Settled
Severity
3 of 5
Impact
A$10 million civil penalty; customer losses of at least A$2,938,750 · 13 clients of one adviser (14 cash management accounts) lost at least A$2,938,750 through 167 fraudulent transactions; more than half a million customers held a Macquarie CMA in 2017.
What happened?
Macquarie let cash management account (CMA) holders give third parties such as financial advisers, stockbrokers and accountants different levels of authority over their accounts, including a limited authority to withdraw only the third party's fees. It also gave registered third parties a bulk transacting facility: by uploading a template or data file to an online system operated by Macquarie, they could make multiple withdrawals across multiple customer accounts at once.[1][2]
Per the judgment, by early 2014 bulk fee transactions generated an email alert when they contained a transaction above a specified amount, but there was no written practice or procedure to review or monitor those alerts, so they "had little or no effect in mitigating the risk of fraudulent transactions". From mid-2016 Macquarie staff identified in papers and reviews the risk that bulk fee transacting could be used for fraud, but effective controls were not implemented until January 2020.[2]
As a result, Macquarie did not detect 167 fraudulent transactions totalling almost A$3 million that a financial adviser made between October 2016 and October 2019 on 14 accounts held by 13 of his clients, 97 of which had triggered alerts that were not systematically reviewed. The adviser was later sentenced to six years' imprisonment and permanently banned, ASIC said.[1][2]
Macquarie initially defended ASIC's proceeding but later admitted that between 1 May 2016 and 15 January 2020 it failed to do all things necessary to provide its financial services efficiently, honestly and fairly. Justice Wigney found the existing controls "plainly deficient or inadequate" and accepted the agreed A$10 million penalty as appropriate, while finding the conduct was not deliberate or reckless but the product of "neglect, laxity or inaction" by certain employees.[1][2][3]
When did it happen?
- Oct 2016
A financial adviser begins making unauthorised withdrawals from clients' Macquarie cash management accounts through the bulk transacting facility.[1][2]
- Oct 2019
The last of 167 undetected fraudulent bulk transactions is made.[1][2]
- Jan 2020
Macquarie introduces a real-time alert system notifying account holders of transactions initiated by people they had authorised, effectively remedying the failures.[2]
- May 2020
Macquarie implements a fraud monitoring program for bulk transacting.[2]
- Apr 19, 2024
The Federal Court orders Macquarie Bank to pay an A$10 million penalty in ASIC v Macquarie Bank Limited [2024] FCA 416.[1][2][3]
What was the impact?
- Financial: A$10 million civil penalty; customer losses of at least A$2,938,750[1][2]
- Customers: 13 clients of one adviser (14 cash management accounts) lost at least A$2,938,750 through 167 fraudulent transactions; more than half a million customers held a Macquarie CMA in 2017.[1][2]
Severity 3 of 5: A regulatory finding with an A$10 million court-ordered penalty and customer losses of at least A$2,938,750 from 167 undetected fraudulent transactions over three years.
How did Macquarie Bank Limited respond?
Macquarie admitted the contravention and agreed with ASIC to pay the A$10 million penalty; the court noted it had implemented effective controls from January 2020 and a fraud monitoring program from May 2020. No separate public statement from Macquarie was found as of 21 October 2026 (checked ASIC's release, the judgment and trade-press coverage).[1][2]
What was the outcome, and did regulators act?
The Federal Court declared that Macquarie contravened s 912A of the Corporations Act and ordered it to pay a A$10 million penalty. ASIC chair Joe Longo said the case sent a message that financial institutions "must have appropriate controls in place". The sources do not say whether the affected clients were compensated.[1][2][3]
Why was Macquarie Bank fined A$10 million by the Federal Court?
Because, per ASIC and the court, it failed between 2016 and January 2020 to have effective controls to prevent and detect unauthorised fee withdrawals that financial advisers and other third parties made from customers' cash management accounts through its bulk transacting facility. Macquarie admitted the contravention and agreed the penalty.
Was any money lost in the Macquarie bulk transacting case?
Yes. The judgment says one financial adviser made 167 fraudulent transactions between October 2016 and October 2019 on 14 accounts held by 13 clients, causing losses of at least A$2,938,750. The sources reviewed do not say whether those clients were compensated.
Was the Macquarie system AI?
No. The bulk transacting facility was an automated online system that processed uploaded data files of withdrawals, with threshold-based email alerts. Neither ASIC nor the court described it as AI; the failure was the lack of effective controls and review around an automated channel.
What did Macquarie change after the fraudulent withdrawals?
Per the judgment, in January 2020 Macquarie introduced a real-time alert system notifying account holders of transactions initiated by people they had authorised, and in May 2020 it implemented a fraud monitoring program for bulk transacting. A later review found no further fraudulent bulk fee transactions.
- 24-080MR Macquarie Bank to pay $10 million for failure to properly monitor system for third party fee withdrawals from customer accounts official
- Australian Securities and Investments Commission v Macquarie Bank Limited [2024] FCA 416 (judgment) court
- Federal Court hands down $10m penalty to Macquarie news
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