Westpac’s woes worsen

More allegations of wrongdoing could emerge

WESTPAC’S troubles relating to a money laundering and child exploitation scandal are set to widen with the financial crime watchdog likely to include additional allegations of wrongdoing in its case against the lender.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) last year accused the bank of failing anti-money laundering and counter-terrorism laws on reporting transactions on 23 million occasions and in November filed civil proceedings in the Federal Court.

Australia’s second-largest bank says it disclosed to AUSTRAC additional suspicious matter reports in relation to potential child exploitation as well as issues regarding its obligation to file threshold transaction reports.

The bank said it had been notified by the watchdog that these matters were being investigated and it had sought further information from

Westpac. AUSTRAC has also said it may amend its statement of claim to include allegations arising from these investigations.

Shares in the bank were about 4 per cent lower at $17.89 by close of trade yesterday, and have lost nearly a third of their value since the scandal surfaced last November.

Westpac, which has already set aside $900 million for a potential legal penalty arising from the case, in May admitted to a substantial majority of the allegations.

Earlier this month, the bank released the findings of an investigation into its breaches of money laundering and child exploitation laws and blamed the failures on a mix of technology and human error, claiming there was no “intentional wrongdoing”.

The scandal led to then Westpac CEO Brian Hartzer and chairman Lindsay Maxsted stepping down, followed by a string of senior management changes.

Westpac has since set up a new legal, regulatory and compliance board subcommittee and created a new executive position directly responsible for financial crime compliance.