It's now up to the Commonwealth Bank to restore the trust of the nation after it was slammed with a $700 million fine for money laundering, Treasurer Scott Morrison says.

Under the settlement with financial intelligence agency AUSTRAC, CBA will also pay $2.5 million in legal fees, subject to Federal Court approval.

The country's largest bank admitted to 53,506 breaches of anti-money laundering and counter-terrorism laws.

Mr Morrison said this has been an egregious episode and a failure to carry out appropriate assessments and controls.

CBD workers walk past the a Commonwealth Bank of Australia branch in Sydney, Monday, June 4, 2018. The CBA has a reached a $700 million dollar settlement

AAP

"It is for them to incur these penalties and get on with the job of restoring trust in the conduct of the CBA," the treasurer told reporters in Sydney.

For that reason, he does not believe the bank will pass on the fine by inflicting higher fees and charges on its customers.

"So I am sure CBA would be thinking about that very, very carefully."

But Labor's finance spokesman Jim Chalmers was quick to remind the government this is one of the major banks it wants to give a multi-billion dollar tax cut.

"The Commonwealth Bank's is the biggest ever but still around one-sixth of what (Prime Minister) Malcolm Turnbull intends to hand the Commonwealth Bank as part of his big business tax handouts," he told reporters in Brisbane.

File image of Peter Dutton (AAP)

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Home Affairs Peter Dutton said CBA's disregard of its anti-money laundering and counter-terrorism obligations had allowed criminals to exploit its systems and put the Australian community at risk.

"This very large number of breaches over several years is unacceptable and should never have been allowed to happen," Mr Dutton said.

Attorney-General Christian Porter commended AUSTRAC on its prosecution of the grave allegations against CBA.

"I congratulate AUSTRAC, its CEO and legal team for their engagement with me which has enabled this matter to be resolved in such a successful and speedy way," Mr Porter said in a statement on Monday.

Shadow assistant treasurer Andrew Leigh said the size of the fine reflected the gravity of CBA's wrongdoing.

"Again it reinforces the call we have been making for the last two years for a royal commission," Dr Leigh told Sky News.

"We have seen from CBA alone, scandals ranging from children's bank accounts to charging dead people for work that hadn't been done."