Bank fined $1.3bn
WESTPAC CEO Peter King has apologised for the bank’s failings after it agreed to pay a $1.3bn fine to settle its civil court case with the financial crimes regulator Austrac.
It is the largest fine in Australia’s corporate history and dwarfs Commonwealth Bank’s $700m settlement with regulator Austrac in 2017.
The case, which has battered Westpac’s reputation, involves 23 million breaches of anti-money laundering legislation.
“We are committed to fixing the issues to ensure that these mistakes do not happen again,” Mr King said. “This has been my number one priority. We have also closed down relevant products and reported all relevant historical transactions.” Austrac CEO Nicole Rose said the settlement sent a strong message to industry that Austrac would take action to ensure the financial system remained strong so it could not be exploited by criminals.
“We’re ramping up our guidance and education this year to ensure that (businesses) are well aware of their requirements,” she said.
“But I have to say since the Commonwealth Bank action, we’ve seen an increase in suspicious transaction reporting. So businesses are starting to take this very seriously.”
As part of the agreement reached with Austrac, Westpac has admitted to additional contraventions outlined in an amended statement of claim. The additional contraventions had added to the penalty, it said.
Mr King said the agreement with Austrac was an important step in the court process. “It provides more certainty to all our stakeholders as we continue to implement the measures in our Response Plan and complete the implementation of recommendations from the reviews that have been conducted,” he said.
The bank’s failure to identify all its money laundering and counter-terrorist financing risks from international payment flows had a cascading impact on law enforce
Westpac cops largest ever corporate fine as it settles case with Austrac
Number of times Westpac allegedly breached anti-money laundering laws ment, according to a statement of agreed facts and admissions (SOFA) drafted by Westpac with Austrac.
The SOFA, which will be presented to the Federal Court for approval of the proposed $1.3bn penalty, said Westpac’s conduct meant opportunities had been lost to disrupt possible unlawful activity, including child exploitation, money laundering, terrorism financing and tax offences.
“Westpac failed to identify activity potentially indicative of child exploitation risks by failing to implement appropriate transaction monitoring detection scenarios,” it said.
The SOFA said 5.7 million late international funds transfer instructions (IFTI) involving $2.9bn fell outside the Australian Tax Office’s statutory limits in relation to corrective action against taxpayers who have lodged tax returns. Westpac’s failure to lodge complete and timely IFTI reports might have undermined the tax system, according to Austrac.
Transparency was also compromised when the bank failed to pass on information about the origin of funds transferred to other institutions, potentially affecting their ability to manage money-laundering risk.
Austrac initiated the action against Westpac in November, with the revelations leading to the departure of CEO Brian Hartzer and chairman Lindsay Maxsted.