APRA drops investigation into Westpac over failure to report transactions to anti-money laundering regulator Austrac
APRA abandons investigation linked to the bank’s failure to report international money transfers, saying no banking rules were broken.
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The prudential regulator has closed an investigation into Westpac over possible breaches of banking rules following its massive failure to report transactions to anti-money laundering regulator Austrac, which led to the largest fine in corporate Australian history.
In a statement released on Friday morning, the Australian Prudential Regulatory Authority (APRA) said it also ended a probe into whether any specific current or former bank executives broke rules under the so-called BEAR legislation, which governs executive behaviour.
However, APRA said it will keep in place an additional $1bn capital “add-on” until it completes a court enforceable undertaking to introduce an integrated risk remediation plan to uplift risk governance across its business with ongoing independent review over its progress.
“Westpac remains subject to a court enforceable undertaking to implement an integrated risk governance remediation plan to uplift risk governance across its business with ongoing independent review over its progress,” the regulator said in a statement.
“The $1 billion operational risk capital add-on, which reflects the bank’s heightened operational risk profile, will also remain in place until Westpac completes its remediation under the CEU to APRA’s satisfaction.”
The revelation that Westpac failed to report millions of money transfers to Austrac, including those which could be linked to child abuse in the Philippines, resulted in the bank agreeing to pay a $1.3bn fine in September last year.
The scandal sparked a management and board clean out, claiming the scalp of CEO Brian Hartzer and chairman Lindsay Maxsted.
The decision by APRA comes on the back of corporate regulator ASIC in December also dropping its investigation without taking any action against the bank.
APRA deputy chair John Lonsdale said despite closing the investigation the regulator would continue to monitor the bank until it fixes cultural and governance issues.
“Although the investigation has not found evidence of breaches of the Banking Act or the BEAR, APRA remains determined to ensure Westpac rectifies its risk governance weaknesses effectively and sustainably,” he said.
“Under the enforceable undertaking, Westpac has clearly defined Executive and Board accountabilities for the implementation of its integrated risk governance remediation plan. APRA will be holding Westpac to account for the delivery of the required improvements.”
In a statement Westpac acknowledged the shuttering of the case.
“Westpac notes that the Australian Prudential Regulation Authority (APRA) has today announced that it has closed its investigation into matters related to the Austrac proceedings,” the bank said in a release to the ASX.
“This follows the conclusion of ASIC’s Austrac-related investigation in December 2020.”
Originally published as APRA drops investigation into Westpac over failure to report transactions to anti-money laundering regulator Austrac
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