Westpac CEO digs in after bank hit with laundering lawsuit

SYDNEY: Westpac Banking Corp chief executive officer Brian Hartzer is digging in after the lender was accused of the biggest breach of money-laundering and terrorism financing laws in Australian history, including failing to detect payments linked to child abuse.

“I absolutely accept that there is a need for accountability on all of these matters,” Hartzer said on a media call, adding he will personally lead the response. He pledged to “get to the bottom of this and make sure we fix it so it never happens again.”

Australia’s financial crimes agency yesterday lodged a lawsuit accusing Westpac of systemically breaching money-laundering laws more than 23 million times and failing to report more than A$11bil (Us$7.5bil) in international transfers. The breaches, which occurred between November 2013 and June 2019, each carry a maximum fine of A$21mil.

The bombshell allegations cap a tumultuous period for Australia’s finance industry that has seen two of the big-four bank CEOS resign and lenders savaged after an inquiry uncovered years of misconduct that has led them to set aside billions of dollars to compensate wronged customers.

Westpac shares fell 3.3%, slicing about A$3.1bil off its market value. The other big banks also fell, dragging down the benchmark index. National Australia Bank Ltd declined 3.1%, Australia & New Zealand Banking Group Ltd dropped 2.1% and Commonwealth Bank of Australia slid 1.3%.

On the late afternoon media call, Hartzer dodged repeated questions about whether he had offered to resign, or was best-placed to lead the response, given the breaches occurred on his watch.

In August 2017, Ian Narev resigned as Commonwealth Bank of Australia CEO less than two weeks after the lender was sued for more than 53,000 breaches of money-laundering rules. That case was eventually settled with the bank paying a record A$700mil fine.

In February this year, National Australia CEO Andrew Thorburn quit just days after being the target of withering criticism by an inquiry into financial industry misconduct, which questioned whether he was capable of leading the lender’s response to a string of scandals.

Among the most serious allegations, Austrac said Westpac failed to carry out appropriate due diligence on 12 customers whose accounts showed repeated patterns of frequent low value transactions to countries where they had no apparent family ties – including the Philippines and South-east Asia – even though it knew since 2013 that these patterns were indicative of child exploitation risks.