Finance Finance News Westpac blames tech, errors for compliance scandal

Westpac blames tech, errors for compliance scandal

Westpac profit dividend
Westpac has blamed a mix of technology and human error for its breaches of anti-money laundering and child exploitation laws. Photo: AAP
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Westpac has blamed its breaches of anti-money laundering and counter-terrorism financing laws on deficient processes, poor understanding and lack of resources.

The country’s second-largest bank has released the findings of an investigation into its money laundering and child exploitation scandal and says the failures occurred due to a mix of technology and human error, and not “intentional wrongdoing”.

“While the compliance failures were serious, the problems were faults of omission. There was no evidence of intentional wrongdoing,” Westpac chief executive Peter King said in a statement.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has accused the bank of failing anti-money laundering and counterterrorism laws on reporting transactions on 23 million occasions.

The financial crimes watchdog last November filed civil proceedings in the Federal Court against Westpac, forcing the bank to set aside $900 million for a potential legal penalty.

Banks waste millions on largely ineffective anti-laundering operations

Westpac in January set up an external advisory panel, comprising former NBN chairman Ziggy Switkowski, former Sydney Water CEO Kerry Schott and BCG Australia co-founder Colin Carter to review the board’s risk governance and accountability.

The failure properly to adhere to AUSTRAC guidance for child exploitation risk in respect of some products occurred due to deficient financial crime processes, compounded by poor individual judgements, the bank said on Thursday.

The failure concerning International Funds Transfer Instructions (IFTIs) non-reporting occurred due to a mix of technology and human error dating to 2009.

“Consequences that have been applied to individuals include significant remuneration impacts and disciplinary actions,” Mr King said.

“A number of relevant staff” had already left the company, he said.

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

-with AAP