Borrow
Westpac blames poor judgement for money laundering breaches
Poor individual judgement has been cited as one of the reasons Westpac was alleged to have made 23 million breaches of Australia’s anti-money laundering laws.
Westpac blames poor judgement for money laundering breaches
Poor individual judgement has been cited as one of the reasons Westpac was alleged to have made 23 million breaches of Australia’s anti-money laundering laws.
The bank has now released the findings from its own investigation into its compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
In November last year, the Australian anti-terrorism regulator filed a civil penalty order against the big four bank, alleging systemic non-compliance with the AML/CTF Act, which even saw it failing to detect known child exploitation risks.
The company board had made a commitment to make the review’s results public at its 2019 annual general meeting, with the latest update from the bank revealing a concession from Westpac that it had failed to properly adhere to AUSTRAC guidance for child exploitation risk.
This was due to deficient financial crime processes, compounded by poor individual judgements, the bank’s statement read.
In its review, Westpac identified three primary causes of the AML/CTF compliance failures:
- Some areas of anti-money laundering and counter-terrorism financing risk were not sufficiently understood within Westpac;
- There were unclear end-to-end accountabilities for managing AML/CTF compliance; and
- There was a lack of sufficient AML/CTF expertise and resourcing.
Weighing in on the findings, chairman John McFarlane said it had been his experience since joining the bank “that Westpac deeply regrets this matter”.
“Indeed, recognising the seriousness of the issues raised by AUSTRAC, the former CEO stepped down and the former chairman brought forward his retirement,” he added.
“We are all committed to fixing these issues so they don’t happen again.”
The report noted that with the benefit of hindsight, and the board’s escalation of focus on AML/CTF compliance, “directors could have recognised earlier the systemic nature of some of the financial crime issues Westpac was facing”.
According to Westpac CEO Peter King, the review looked back more than 10 years, with “appropriate” action already having been taken where wrongdoing occurred.
“Remuneration and disciplinary actions took into consideration decisions already taken and announced, the level of direct managerial responsibility or accountability for the compliance failures, and the level of culpability for failings,” he outlined.
“While the compliance failures were serious, the problems were faults of omission.”
The CEO observed “there was no evidence of intentional wrongdoing”.
Mr King’s comments come after the bank recently conceded it would likely be forced to cough up $900 million for the civil claim.
This was detailed in an announcement to shareholders that detailed a billion-dollar hit to cash earnings in 1H20.
In light of the report, and in acceptance of the review’s recommendations, Mr King recognises a need for change to take place:
“We have established a new Board Legal, Regulatory & Compliance sub-committee, appointed a deeply experienced executive to a new Executive position directly responsible for financial crime compliance, and made a number of other organisational changes,” he stated.
“We will have no tolerance for controllable negative events. Our transformation program has begun and will bring deep cultural change.”
“We completely accept that some important aspects of Westpac’s financial crime risk culture were immature and reactive, and we failed to build sufficient capacity and experience in some important areas,” Mr King added.
“We have learned from this and are absolutely committed to making amends for this event.”
Westpac has revealed it would continue to engage with AUSTRAC on the legal proceedings, after submitting its civil penalty defence and admissions on 15 May 2020.
Did you enjoy this article? You may also be interested in:
About the author
About the author
Banking
Westpac faces civil proceedings
The corporate regulator has commenced civil penalty proceedings against Westpac alleging the big four bank used misleading and unfair sales of consumer credit insurance. ...Read more
Banking
CBA to pay $7m penalty for overcharged interest
The Commonwealth Bank of Australia has been ordered to pay a $7 million penalty for charging an interest rate on business overdraft accounts that was substantially higher than what customers were advi...Read more
Banking
CBA taken to court over banking fees
ASIC has commenced civil penalty proceedings against the Commonwealth Bank of Australia, alleging that it charged clients millions in monthly fees when it was not entitled to do so. ...Read more
Banking
Big 4 bank offers $10m in grants to flood-affected customers
A big four bank has launched a $10 million Flood Support Fund to provide grants to customers and businesses in flood-affected areas. ...Read more
Banking
Guide to NSW flood financial aid: From the banks to insurers
The banks are offering customers affected by the NSW floods loan repayment deferrals, among other forms of financial aid, while the Insurance Council of Australia has declared a catastrophe for much o...Read more
Banking
APRA drops big 4 money laundering case
APRA has followed ASIC in closing its investigation into Westpac over the AUSTRAC scandal, which led to the largest corporate fine in Australian history. ...Read more
Banking
ASIC takes trading platforms to court
ASIC has launched civil penalty proceedings against CommSec and AUSIEX for “compliance failures” over a significant period of time. ...Read more
Banking
BOQ sets sights on big 4 banks with latest merger
The Bank of Queensland has announced that it will buy ME Bank for $1.3 billion in a bid to challenge the dominance of the big four banks. ...Read more
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
The continued property boom, ethical investing and engaging with your super fund
Listen now
Banking
Westpac faces civil proceedings
The corporate regulator has commenced civil penalty proceedings against Westpac alleging the big four bank used misleading and unfair sales of consumer credit insurance. ...Read more
Banking
CBA to pay $7m penalty for overcharged interest
The Commonwealth Bank of Australia has been ordered to pay a $7 million penalty for charging an interest rate on business overdraft accounts that was substantially higher than what customers were advi...Read more
Banking
CBA taken to court over banking fees
ASIC has commenced civil penalty proceedings against the Commonwealth Bank of Australia, alleging that it charged clients millions in monthly fees when it was not entitled to do so. ...Read more
Banking
Big 4 bank offers $10m in grants to flood-affected customers
A big four bank has launched a $10 million Flood Support Fund to provide grants to customers and businesses in flood-affected areas. ...Read more
Banking
Guide to NSW flood financial aid: From the banks to insurers
The banks are offering customers affected by the NSW floods loan repayment deferrals, among other forms of financial aid, while the Insurance Council of Australia has declared a catastrophe for much o...Read more
Banking
APRA drops big 4 money laundering case
APRA has followed ASIC in closing its investigation into Westpac over the AUSTRAC scandal, which led to the largest corporate fine in Australian history. ...Read more
Banking
ASIC takes trading platforms to court
ASIC has launched civil penalty proceedings against CommSec and AUSIEX for “compliance failures” over a significant period of time. ...Read more
Banking
BOQ sets sights on big 4 banks with latest merger
The Bank of Queensland has announced that it will buy ME Bank for $1.3 billion in a bid to challenge the dominance of the big four banks. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
