Independent inquiry into Australia's biggest bank

The woes mounted for Australia's biggest bank Monday with an independent inquiry to be launched into its governance, culture and accountability after it was accused of breaching anti-money laundering legislation.

The Commonwealth Bank of Australia was thrown into turmoil by a civil case earlier this month by financial intelligence agency AUSTRAC for alleged "serious and systemic non-compliance" with the laws more than 50,000 times.

It now faces a probe by financial services regulator the Australian Prudential Regulation Authority (APRA), which said public confidence in the lender had been hurt by the scandal.

"The Australian community's trust in the banking system has been damaged in recent years, and CBA in particular has been negatively impacted by a number of issues that have affected the reputation of the bank," said APRA chairman Wayne Byres.

"Given its position in the Australian financial system, it is critical that community trust is strengthened.

"A key objective of the inquiry will be to provide CBA with a set of recommendations for organisation and cultural change, where that is identified as being necessary."

The bank, Australia's largest firm by market capitalisation, has been marred by a series of recent scandals over poor financial planning advice, insurance payouts and now allegations of money laundering.

"CBA recognises that events over recent years have weakened the community's trust in us. We have been working hard to strengthen trust, and will continue to do so," said the bank's chair Catherine Livingstone.

"We welcome this opportunity for independent parties to review the work we have already undertaken and advise on what more we can do.

"APRA's oversight of this inquiry will ensure the independence and transparency needed to reassure all our stakeholders."

The bank last week posted record annual profits of Aus$9.93 billion (US$7.86 billion) for the year to June 30, while also announcing chief executive Ian Narev would retire following the AUSTRAC allegations.

APRA said the cost of the probe, which is expected to last six months, will be met by the bank with its findings to be made public.