Westpac accused of breaking law 23 million times, taken to court by dirty money watchdog
Scott Morrison has urged Westpac’s board to reassess chief executive Brian Hartzer’s position after they were caught in an alleged money laundering scandal. Should he resign? VOTE, HAVE YOUR SAY
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
Scott Morrison has urged Westpac’s board to deeply reflect on chief executive Brian Hartzer’s position after an alleged money laundering scandal.
The prime minister said the CEO’s future was in the hands of Westpac’s board after the bank was accused of breaking money laundering and counter-terror financing laws 23 million times.
“They should be taking this very seriously, reflecting on it very deeply, and taking the appropriate decisions for the protection of people’s interests in Australia,” Mr Morrison told ABC’s AM on Thursday.
Mr Hartzer said on Wednesday he was “utterly horrified” after financial crime watchdog, AUSTRAC, accused Westpac of failing to do due diligence on transactions with potential links to child exploitation in Asia.
Mr Morrison said AUSTRAC had done its job and now the board and executive of Westpac needed to do the same.
“These are some very disturbing transactions involving despicable behaviour,” he said.
His comments come after Westpac failed to stop a customer it knew had been jailed for child exploitation offences from making frequent low-value payments to the Philippines despite flagging the activity as suspicious, the nation’s dirty money watchdog has alleged.
The nation’s second largest bank also failed to carry out appropriate due diligence on 12 customers whose bank accounts were showing money transfers that were “indicative of child exploitation risks”, the watchdog has said.
The shocking claims are detailed in a mammoth case launched by the nation’s anti money-laundering and counter-terrorism financing regulator against Westpac.
The Australian Transaction Reports and Analysis Centre, or AUSTRAC, has alleged Westpac breached anti-money laundering and terrorism rules on more than 23 million occasions.
The banking giant allegedly failed to properly monitor and report more than $11 billion in funds which flowed between Australia and the world including locations in South East Asia which are hot spots for child sexual abuse.
Westpac also failed to properly monitor relationships allowing overseas banks to use its payment systems despite these banks having business relationships with financial institutions in high-risk locations such as Iraq, Lebanon, Ukraine, Zimbabwe and Democratic Republic of Congo, AUSTRAC said in documents lodged with the Federal Court on Wednesday.
The case puts Westpac on track to receive the biggest fine in Australian corporate history.
That dubious title is currently held by Commonwealth Bank which agreed to pay a record $700 million fine in 2018 after breaching anti money-laundering and counter-terrorism financing laws 53,506 times.
Each breach of those laws attracts a maximum penalty of $21 million, meaning Westpac theoretically faces a $483 trillion fine.
Prime Minister Scott Morrison said he was “absolutely appalled” by the allegations.
“Banks need to keep lifting their game,” he said on Wednesday.
The bulk of Westpac’s alleged breaches – about 19.5 million – relate to it failing to notify AUSTRAC about international fund transfers made between 2013 and 2018.
More specific allegations include that a Westpac customer who had been jailed for child exploitation offences was able to send frequent low-value money payments to the Philippines.
Westpac identified suspicious activity on one of the customer’s bank accounts and later learnt of their conviction, AUSTRAC alleges.
MORE NEWS
EX-MAYOR LAUNCHES BIZARRE DEFENCE TO CASH-FOR-FAVOURS CLAIMS
SUMMER TO HEAT UP FOR POLICE AT SOUTHEAST BEACHES
This should have triggered close monitoring and reporting of the customer, the agency says.
But Westpac failed to monitor other accounts held by the customer which were then used 10 times to send about $2600 to the Philippines from June 10 to August 19 this year, AUSTRAC alleges.
The breaches occurred despite Westpac being aware since 2013 that its internal systems were not properly monitoring and processing international fund transfers, AUSTRAC alleges.
AUSTRAC chief executive Nicole Rose said money laundering and terrorism financing laws were in place to protect the nation from criminal exploitation.
“Serious and systemic noncompliance leaves our financial system open to being exploited by criminals,” she said.
Westpac chief executive Brian Hartzer said the bank has self-reported the breaches to AUSTRAC and was working with agencies to stamp out financial crime.
“These issues should never have occurred and should have been identified and rectified sooner,” he said.
Originally published as Westpac accused of breaking law 23 million times, taken to court by dirty money watchdog