Australia's corporate regulator said Friday it would investigate the nation's biggest bank, the Commonwealth, over its handling of alleged breaches of money laundering and terrorism financing laws.

The Commonwealth Bank of Australia (CBA) was already been under fire after it was taken to court in a civil case last week by financial intelligence agency AUSTRAC for "serious and systemic non-compliance" of the laws more than 53,000 times.

Now the Australian Security and Investment Commission (ASIC) regulator said it was probing whether the bank complied with continuous disclosure obligations and if its directors carried out their duties under the Corporations Act.

"ASIC has commenced inquiries into this matter and any consequences this matter has for the laws we administer," ASIC chairman Greg Medcraft told a parliamentary committee hearing.

While not referring specifically to CBA, Australia's biggest company by market capitalisation, Medcraft stressed the importance of organisational culture in financial service companies.

"If organisations are not behaving in the right way, the crowd will let them know, if not the headlines -- often with damaging effects on their brand and reputation," he said.

The governor of the Reserve Bank of Australia, Philip Lowe, warned at a separate Senate economics committee in Melbourne there needed to be accountability in the financial sector, without directly commenting on the AUSTRAC case.

"It's very serious. We have laws for reasons, banks should not be doing money laundering and they should know who is opening their accounts," the Sydney Morning Herald quoted him as saying.

"If shortcomings are identified then there needs to be accountability, through the court and internally through the organisation."

CBA could face fines running into billions of dollars from the AUSTRAC case.

Treasurer Scott Morrison on Thursday told ABC radio the Commonwealth had had an "epic fail" over the money laundering allegations, adding that questions about the firm's culture and governance were "very troubling".

There has been pressure from the Labor opposition for a royal commission into banking misconduct after public outrage following a series of consumer fraud allegations as well as claims of interbank lending interest rate rigging.

But the conservative government has so far refused such calls, and instead tightened laws and introduced an annual parliamentary grilling for the heads of the big banks.

CBA on Wednesday posted a 7.6 percent jump in annual net profit to a record Aus$9.93 billion (US$7.86 billion) for the year to June 30.

Source: AFP