In admitting this, ANZ also said it was unsure if it could prevent similar scandals in the future, according to a report in the Financial Times.
The FT report quoted ANZ Chief Executive Shayne Elliott as saying the Australian bank had limited scrutiny over the actions of AmBank despite a 24 per cent stake in the Malaysian lender and the nomination of two directors to its board.
He said he remained concerned about potential reputational damage linked to ANZ’s investment.
“Boards don’t review account opening documents and look at suspicious transaction reporting, obviously, so there was nothing that I saw,” FT quoted Elliott as saying.
“Of course we are nervous about it. But again there is a limit; we just can’t turn up and demand things,” he added.
Elliot was on AmBank’s board between June 2013 and October 2015.
The FT report said AmBank had been caught up in the wide-ranging scandal around the alleged looting of billions of dollars from 1MDB.
Referring to the alleged flows of misappropriated cash through AmBank accounts, Elliott said: “Of course, any responsible director…was appalled at what had happened, wanted to see real change, wanted to ensure it didn’t happen again. Those reactions were not limited to ANZ representatives on the board.”
Elliott told the Financial Times that he was not on the AmBank board at the time the alleged transactions took place but acknowledged there were clear breakdowns in compliance.
“We wrote to them [AmBank] formally as a shareholder and lobbied or suggested clearly that they act quickly to change their processes as you would imagine,” he was quoted as saying by the FT report.
He said he was confident AMBank had improved but added that he could not say this with certainty “because we don’t run the place”.
“We have directors there, that is true. We second some staff but the staff work with AmBank. We can’t tell them what to do… They can sometimes ask for our advice but we don’t have the ability to control.”
The FT report said AmBank did not respond to a request for comment.