* NAB says investigating weaknesses in Know Your Customer systems
* Bank says may identify further issues
* Outcomes of investigation, possible fixes uncertain (Adds context in paragraph 7 and 8)
By Paulina Duran
SYDNEY, Nov 15 (Reuters) - National Australia Bank NAB.AX has found weaknesses in systems that monitor customers as part of a programme to comply with money-laundering and counter-terrorist financing laws, and flagged further problems could be discovered.
The revelation, buried in a note to NAB's 162-page annual report on Tuesday, comes as its largest rival, Commonwealth Bank of Australia CBA.AX , faces the possibility of a board spill at its annual general meeting on Thursday over its handling and disclosure of large-scale breaches of the laws.
NAB said it was investigating and fixing a number of issues, including weaknesses with its so-called 'Know Your Customer' systems that "impacted transaction monitoring and reporting for some specific areas".
"It is possible that, as the work progresses, further issues may be identified," NAB said in the report, which was filed with the Australian Securities Exchange.
"The outcomes of the investigation and remediation process for specific issues identified to date, and for any issues identified in the future, are uncertain."
CBA is already facing possibly billions of dollars in fines after Australia's money-laundering watchdog, AUSTRAC, took the country's largest lender to court on accusations of more than 50,000 breaches of its rules. NAB, as well as Westpac WBC.AX and ANZ ANZ.AX , have told parliamentary hearings that the regulator had cleared them of the specific type of breach as seen in CBA, mostly relating to ATMs that accept cash deposits.
But there are many other parts of the bank to which anti-money laundering and counter-terrorism financing laws apply.
Australia's corporate and banking regulators have launched their own separate investigations into the breach of these laws.
Bill Watson, the chief executive of First Super, a A$2.6 billion ($1.97 billion) pension fund, wrote this week to 27 other large CBA shareholders asking them to vote to replace the bank's board with "competent" members.
CBA has not disputed that it processed tens of thousands of illicit transfers but argues the breaches were largely caused by a software glitch and contests its level of responsibility.
Representatives for AUSTRAC and NAB were not immediately available for comment. ($1 = 1.3177 Australian dollars)