Westpac accused of over 23 million AML/CTF violations
(25 November 2019 – Australia) Westpac and its CEO are under increasing pressure following the accusation of breaching AML/CTF laws on over 23 million occasions by Australia’s anti-money laundering and terrorism financing regulator, Austrac.
Following a detailed investigation into Westpac’s non-compliance, Austrac filed the orders with the Federal Court of Australia which detail the extent of the bank’s alleged failings. Each breach of money laundering laws has the potential to incur a penalty between A$17 and A$21 million.
CEO, Brian Hartzer is for now receiving the benefit of the doubt from his board, because the board has no information that indicates he knew Westpac took 18 months to properly monitor suspect transactions to the Philippines after a warning from the financial crime intelligence agency.
Chairman Lindsay Maxsted said he had no direct evidence that Mr Hartzer knew AUSTRAC had told the bank in December 2016 about the need for additional monitoring of fund transfers to the Philippines to catch the purchase of child exploitation material.
The bank has closed down the LitePay international fund transfer product at the centre of the child exploitation allegations, has put some executive bonus payouts on hold, and set up a new board subcommittee on financial crime to oversee the independent review into accountability announced on Friday.
Nicole Rose, chief executive officer, Austrac says: “These AML/CTF laws are in place to protect Australia’s financial system, businesses and the community from criminal exploitation. Serious and systemic non-compliance leaves our financial system open to being exploited by criminals.
“The failure to pass on information about IFTIs to AUSTRAC undermines the integrity of Australia’s financial system and hinders Austrac’s ability to track down the origins of financial transactions, when required to support police investigations.”
This follows the A$700 million penalty paid by CBA last year following breaches to AML and CTF laws including the failure to monitor thousands of transactions made through its smart ATMs.
In a statement, Westpac CEO Brian Hartzer admits to the bank's culpability and pledges that it will work to improve and bolster the management of financial crime risks including strengthening policies, data feeding systems, processes and controls.
“We recognise these are very serious and important issues. We are committed to assisting Austrac and law enforcement agencies to stop financial crime," he says. “These issues should never have occurred and should have been identified and rectified sooner. It is disappointing that we have not met our own standards as well as regulatory expectations and requirements."