Finance Finance News Banking Labor calls for federal inquiry into scandal-plagued Westpac

Labor calls for federal inquiry into scandal-plagued Westpac

Labor's Andrew Leigh pushed hard for a federal inquiry. Photo: AAP
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Allegations that Australia’s oldest bank breached anti-money laundering and counter-terrorism finance laws 23 million times has sparked calls from Labor that they front a federal parliamentary inquiry.

Frontbencher Andrew Leigh has called on Wespac’s senior executives to provide public evidence about how the lender became engulfed by accusations it committed the biggest violation of money-laundering laws in Australian history.

Westpac was plunged into crisis last Wednesday after financial intelligence agency AUSTRAC announced it had officially launched a lawsuit against the lender.

It alleged that Westpac failed to report on time more than 19.5 million international funds transfers to Austrac between 2013 and 2018.

This amounted to more than $11 billion over six years, AUSTRAC said.

Some of the transactions are suspected to have funded child exploitation in Southeast Asia.

“The committee should recall Westpac to explain what it’s doing to stop such a scandal ever happening again,” Labor’s Dr Leigh told AAP on Wednesday.

Westpac was set to be one of the two major banks to offer mortgages under the federal government’s first-home loan deposit scheme.

Only National Australia Bank has been announced as one of the major banks for the scheme, which allows low- and middle-income earners to get financing without a large deposit.

But Westpac was axed as the other bank in light of the money-laundering allegations it is currently facing according to bank insiders, The Australian reports.

“Westpac contravened the Act on over 23 million occasions. These contraventions are the result of systemic failures in its control environment, indifference by senior management and inadequate oversight by the board,” AUSTRAC said in a statement of claim filed with the Federal Court.

The Coalition government will have to choose from either Commonwealth Bank or ANZ to join the scheme with NAB, giving the banks get access to 5,000 eligible first home buyers per year each.

NAB recently settled a $50 million class action by customers who were sold junk insurance products.

Applications to the scheme would have to be made directly to the banks and NAB has promised not to charge them interest rates higher than those not taking part.

The scheme allows home buyers to only put down a five per cent deposit on the loans, with the National Housing Finance and Investment Corporation guaranteeing the rest of what would normally be a 20 per cent deposit.

Westpac’s chief executive Brian Hartzer and chairman Lindsay Maxted have fallen on their swords in light of the scandal.

-with AAP