Finance Finance News Banking Westpac settles money laundering case for $1.3 billion

Westpac settles money laundering case for $1.3 billion

Westpac has reached a deal to settle more than 23 million alleged breaches of anti-money laundering laws. Photo: AAP
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Westpac has reached a deal with financial crimes regulator to settle more than 23 million alleged breaches of anti-money laundering laws by paying a record $1.3 billion penalty.

The penalty is the biggest in Australian corporate history, and is almost double the previous record $700 million fine paid by the Commonwealth Bank for almost 54,000 money laundering breaches, revealed by the ABC in 2017.

Attorney-General Christian Porter said the massive fine should serve as a wake-up call for the banking industry.

In a statement, AUSTRAC said Westpac had admitted to breaching the Anti-Money Laundering and Counter-Terrorism Financing Act more than 23 million times.

These breaches included a failure to properly report more than 19.5 million international funds transfer instructions (IFTI) amounting to more than $11 billion.

AUSTRAC said the breaches included suspicious transactions associated with possible child exploitation as well as failure to assess risks of money laundering and terrorism financing.

“Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac’s non-compliance,” AUSTRAC chief executive Nicole Rose said in the statement.

“Westpac’s failure to implement effective transaction monitoring programs, and its failure to submit IFTI reports to AUSTRAC and apply enhanced customer due diligence in relation to suspicious transactions, meant AUSTRAC and law enforcement were missing critical intelligence to support police investigations.”

Westpac’s chief executive Peter King once again apologised for the contraventions.

“We are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority.

“We have also closed down relevant products and reported all relevant historical transactions.”

The settlement with the Australian Transaction Reports and Analysis Centre (AUSTRAC) comes after intense legal negotiations with the financial crime agency in recent weeks.

Westpac had earlier set aside $900 million for a penalty after flagging that it intended to accept most of the charges levelled by AUSTRAC.

The scandal, which erupted in late 2019, forced the resignation of then Westpac chief executive Brian Hartzer and the retirement of chairman Lindsay Maxsted, along with other board and executive changes.

-with agencies