ASB’s anti-money laundering system wasn’t adequately set to detect paedophile purchases, High Court says

Saturday, 27 June 2026

Fraud victims say ASB’s chief executive and chair should resign after the High Court found the bank’s “Predator” anti-money laundering system was not adequately calibrated to catch payments by paedophiles for child sexual exploitation material.

Earlier this month, the bank was ordered to pay $6.731 million for failures in its anti-money laundering system, but the High Court judgment also made it clear Predator was not well set up to red flag potential payments for child sexual exploitation material.

The court said between April 2021 and June 2024 the “risk rating methodology” for Predator changed, so high-priority alerts were based on a customer’s risk rating only. Otherwise, transactions related to potential terrorism financing and child exploitation were not characterised as being “high priority.”

ASB also failed to respond quickly to over 120,000 “standard” and “high priority” Predator alerts, with some alerts left unresolved for hundreds of days.

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The judgment did not reveal whether that failing resulted in payments being made from ASB accounts for child sexual exploitation material.

However, a modern slavery report from ASB’s parent company, Commonwealth Bank of Australia, shows that at least one paedophile did manage to pay for child sexual exploitation material through ASB accounts in 2021, and while the bank did not prevent the payments, it did alert police.

The Post asked the bank whether ASB chief executive Vittoria Shortt or chairperson Therese Walsh, who became a director of the bank in October 2015 and chairperson in September 2021, should resign.

The bank refused to address the question.

In a statement to The Post, it said the judgment contained “no suggestion that ASB was directly involved in money laundering, child exploitation or terrorism financing at any time”, and that it had changed its risk rating methods after a warning from the Reserve Bank.

But, the bank said: “We accept that ASB’s transaction monitoring and customer due diligence processes had shortcomings, and we didn’t act fast enough to resolve these.”

Criticism

But some are saying ASB failed society, and point to high-profile resignations in Australia over one bank’s failures involving its systems supposed to prevent money laundering and child sexual exploitation.

In 2019, Brian Hartzer, the boss of Australia's second-largest bank Westpac, resigned after Australia’s anti-money laundering regulator found gaps in its system, and alleged the bank had failed to adequately monitor the accounts of a convicted child sex offender who had regularly sent money to the Philippines.

Westpac’s chairman Lindsay Maxsted also resigned.

Back here, Spanish-New Zealander Borja Ares, who won a compensation payment of $217,000 from BNZ over losses in an investment scam, said the public had a right to expect “exemplary” behaviour from banks and there had to be consequences for executives and directors when banks let society down.

“Resignation would be the minimum thing you could do,” Ares added.

Beth Pottinger-Hockings, who had money stolen from her syphoned through an ASB “mule” account, could not understand why there hadn’t been a national outcry over the failures at ASB.

“No-one’s jumping up and down about it,” she said.

She said Shortt, who started in her role in February 2018, should step down.

“There are far too many people that are being impacted,” she said.

Failure

The failure to adequately calibrate Predator to detect paedophiles attempting to buy child sexual exploitation material was not the only issue during the period of April 2021 to June 2024 investigated by the Reserve Bank.

ASB failed to respond quickly to over 120,000 “standard” and “high priority” Predator alerts, the High Court judgment showed.

The bank had set undisclosed “internal expected timeframes”, but it did not respond within those timeframes to 121,366 Predator alerts involving transactions totalling approximately $12.1 billion, the High Court judgment said.

The longest period of time that an alert remained unresolved was 1301 calendar days for a standard priority alert, and 521 working days for a high priority alert.

ASB also failed to respond in a timely manner to 1648 “unusual activity” reports involving transactions totalling approximately $66.2m during that period, according to the High Court judgment. The longest period of time that one of these reports remained unresolved was 654 calendar days for a standard priority alert on an unusual activity report, and 638 calendar days for a high priority alert, it said.

The failures came during a period in which there was rapid rise in overseas criminals targeting New Zealanders with scams and cyber crime.

But the High Court judgment reveals that as far back as July 2015, ASB was aware of limitations with Predator as a transaction monitoring system.

And from July 2017 it was aware of other issues, such as faulty prioritisations and alerts not being resolved within expected timeframes. ASB’s Audit and Assurance team recorded that Predator was not specifically designed for the purpose of anti money laundering or anti-terrorism financing (AML/CFT) monitoring.

Inspections

A Reserve Bank on-site inspection in late 2019 identified “several issues”, and the same issues were still evident in another inspection in 2023, as well as extra ones.

The Reserve Bank gave ASB until September 20, 2024 to fix the failings and in the meantime, commenced an investigation into whether ASB had broken the Anti-Money Laundering and Countering Financing of Terrorism Act.

In 2020 and 2021, ASB considered options for implementing a new transaction monitoring system, but prioritised other financial crime-related projects instead, the judgment said. By March 2021, Predator became so old that its vendor no longer supported it, and the bank had to “support” it internally.

Between December 2022 and March 2024, ASB selected and negotiated commercial terms with a vendor for a new transaction monitoring system to replace Predator, but by December 2025, upgrades to the system “had still not been fully implemented”, O’Gorman said.

ASB said: “We continue to improve our systems and processes to comply with AML/CFT obligations, including moving transaction monitoring rules to a new system in April 2026.”

ASB said it had taken longer than it would have liked to make all the changes necessary because the work was complex.