Money laundering a scourge on society: Westpac CEO Hartzer

Both Westpac and ANZ both say they have been cleared of any breaches of anti-money laundering legislation.

Westpac CEO Brian Hartzer arrives to face a parliamentary committee hearing. Pic: AAP

Westpac chief executive Brian Hartzer said the regulator Austrac has “in writing” cleared the lender of any noncompliance with anti-money laundering legislation that the Commonwealth Bank is alleged to have breached more than 53,000 times.

ANZ also says there is no evidence its automated deposit taking systems have breached anti-money laundering laws.

Speaking at the House of Representatives review of the major banks this morning, Mr Hartzer said money laundering was a “real scourge on society and a challenge for the whole economy”.

Reports have suggested that Westpac, along with most major lenders, has been targeted by criminal syndicates looking to launder money.

Liberal MP David Coleman, chair of the economics committee conducting the review, is gearing up for CBA’s appearance before the committee next Thursday, and grilled Westpac on the economic rationale of banks introducing automatic deposit machines allegedly used by money launderers.

Austrac in early August filed claims in the Federal Court that CBA had breached the law thousands of times by failing to send transaction reports to the agency, due to a “coding error” in its intelligent deposit machines, which were rolled out ahead of its major bank rivals with an effective deposit limit far higher than its peers.

Regulations require transactions above $10,000 to be reported to Austrac. CBA’s smart ATMs were introduced with an effective limit of $20,000 — far above the limit and more than four times Westpac’s $4000 limit.

“The limit that we put on cash deposit machines was $4000,” Mr Hartzer said. “We came to the view in our risk assessments that $4000 was an appropriate limit,” he said

Mr Hartzer said the automatic deposit machines were introduced for the convenience of its customers “to manage their cash more efficiently” and “not stand at teller machines”.

Mr Coleman suggested a higher deposit limit would be used to entice more small businesses customers sign up with the bank. “Presumably those relationships can be very valuable,” he said.

Mr Hartzer said the bank was confident it was complying with regulations. “We are complying with Austrac. Just having a limit of how much money you take is not the start and end of our controls,” he said.

“The banks are working very hard with the regulators to stop (money laundering),” he said.

“There are lots of criminals out there who are trying to launder huge amounts of money.

“We have a very thorough process. We have strong controls. It is talked about at our risk committees constantly.”

Later, ANZ chief executive Shayne Elliott said Austrac had found no issues in more than a million transactions reported to it by ANZ.

“Austrac has advised us that it has found no evidence of noncompliance concerning ANZ’s ATMs,” Mr Elliott told MPs.

“I’ve personally met with Austrac to make sure if there’s anything we could learn from this to tighten up controls.

“It is our responsibility to ensure we only open accounts for people we know and trust.”

Additional reporting: AAP