The Australian Bank Westpac has been given a $1.3 billion fine after being accused of breaching money laundering and child exploitation laws.
In a settlement, Westpac has agreed to pay a $1.3 billion fine over allegations from Austrac, a financial intelligence agency, against the bank relating to money laundering and child exploitation. Westpac has been accused of breaching these laws more than 23 times.
At the beginning of the investigation, the bank reportedly put $900 million aside as their own estimation of the penalty for their actions, however, it was revealed that the bank had an additional 250 customers who made transactions that were related to child exploitation – a significant increase from the original 12 customers. The fine is $400 million more than their original figure that Westpac was expecting.
On top of the $1.3 billion fine, Westpac owes another concession to Austrac. The company has agreed publicly to more contravention laws against counter-terror and money laundering.
The federal court is set to provide approval in relation to the deal between the regulator and the bank.
In November last year, it was announced that Westpac had broken the AML-CTF laws over 23 million times – this led to Austrac taking federal court action against the bank. The breaches made by Westpac included a dozen customers whose transfers of money to the Philippines were consistent with charges of child exploitation.
According to Westpac, In December of 2019, they “completed a review of all child exploitation transaction types for the Philippines, south-east Asia and Mexico over the prior three year period.” This statement was released in a statement of agreed facts that was filed within the court.
Due to this search in December last year, Westpac reported to Austrac that they had found an additional 248 customers whose transactions and payments were in one way or another consistent with child exploitation.
In addition to these customers, Westpac has confirmed that they found a further 2 that had been convicted of child exploitation changes and were currently making transactions that were suspicious to the company.
In the statement of agreed facts, Westpac released that if they had of “conducted appropriate ongoing customer due diligence with respect to customers 261 and 262, these child exploitation related suspicions could have been identified earlier.”
Most of Austrac’s allegations related to the failure to properly monitor the dealings with correspondent banks.
The child exploitation charges are what have captured the publics attention.
Brian Hartzer, former chief executive, and Lindsay Maxsted, chairman, along with other shareholders, were outraged by the scandals and controversy surrounding the company and have since resigned their positions.
Although the company has denied some of the charges and allegations put against them, they have agreed to a settlement offer and, in May of this year, formally admitted that they broke the law.
In July, Westpac additionally announced that they may have breached a further 450,000 laws.
Peter King, Westpac’s new chief executive, issued a series of apologies in recent weeks that were made by the bank.
King stated that the bank is “committed to fixing the issues to ensure that their 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 proposed penalty for Westpac “reflects the serious and systematic nature of Westpac’s non-compliance,” stated Nicole Rose, Austrac chief executive.
“Westpac’s failure to implement effective transaction monitoring programs, and its failure to submit IFTI [international funds transfer instruction] 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.”
