SYDNEY - Commonwealth Bank of Australia (CBA) agreed to a record penalty of A$700 million ($529.3 million) to settle explosive money laundering charges brought by Australia's financial intelligence agency.

The fine is almost double the amount CBA had set aside to finalize the matter and represents a record penalty for money-laundering and terror finance breaches, the Australian government said on Monday.

Australia's biggest bank breached the relevant laws on 53,750 occasions, according to an agreed statement of facts tendered in court by both parties, where suspicious transactions were repeatedly not reported, and monitoring processes failed.

"The money laundered through the CBA accounts included the proceeds of drug and firearms importation and distribution syndicates – predominantly involving methamphetamine," the court document said.

"Criminal syndicates rely upon money laundering syndicates to import and distribute their drugs."

The proposed settlement will now be presented to Australia's Federal Court for approval, 10 months after the charges were laid.

CBA shares were up 2 percent in early morning trade, in a slightly positive market. Many of the breaches carried maximum penalties of up to A$21 million per contravention, which had left CBA susceptible to being hit by fines running into the billions of dollars.

"While not deliberate, we fully appreciate the seriousness of the mistakes we made," CBA Chief Executive Matt Comyn said in a statement.

"Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward."

The breaches, many of which CBA blamed on a computer error, triggered a selldown in its share price and a board shake-up, with then-CEO Ian Narev announcing his retirement two weeks later amid a public outcry.

Australia's biggest bank is struggling to rebuild its reputation after a series of scandals revealed flaws in its leadership culture, exposing it to closer regulatory scrutiny, higher compliance costs and potential fines.

Its standing as one of Australia's most venerable companies has been tarnished further by malpractice revealed at an ongoing independent inquiry into the country's financial sector.

CBA had previously booked an A$375 million expense to pay civil penalties and legal fees related to charges in its half year accounts.

The bank said on Monday it would book a A$700 million provision in its fiscal 2018 results, to be released in August.

It has also been ordered to carry an additional $1 billion in reserve capital until it satisfies regulators that it has improved oversight to avoid similar breaches in future.

In a scathing report into how the lender allowed money laundering to flourish, the Australian Prudential Regulatory Authority (APRA) said the lender had a "widespread sense of complacency" and was reactive in dealing with risk.

The bank's "continued financial success dulled the senses of the institution" and exposed it to non-financial risks, said the report released in May.