Attorney-General Christian Porter launches stinging attack on Westpac chairman John McFarlane

Attorney-General Christian Porter has launched a stinging attack on Westpac and its new chairman, John McFarlane, over their dealings with the financial crimes regulator.

Westpac chairman John McFarlane. Picture: Adam Yip

Attorney-General Christian Porter has launched a stinging attack on Westpac and its new chairman, John McFarlane, over their dealings with the financial crimes regulator, accusing the big-four bank of arrogance and running a PR campaign while in delicate mediation talks over millions of transgressions of anti-money laundering laws.

Mr Porter’s broadside came as the embattled bank revealed on Tuesday it had found a further 365,000 “incomplete or inaccurate” reports made to Austrac in relation to transfers worth more than $10,000.

After receiving a “notice to produce” from the agency, Westpac also said it had found 175,000 transactions that had not been reported at all.

But it was Mr Porter’s intervention that has again raised the stakes in a legal battle kicked off last November with Austrac’s sensational Federal Court action alleging multiple legal breaches, including transactions facilitating child exploitation in Asia.

The Attorney-General, who warned Westpac he had the final word in signing off on any settlement, declined to comment on the substance of the case because it was before the courts.

“Westpac has initiated a PR campaign while this matter is in mediation, and that PR campaign appears at odds with its apparent contrition shown at the time the offending was exposed,” Mr Porter said.

He also attacked suggestions put by bankers in media articles that breaches of anti-terrorism laws were “victimless”, saying they showed a fundamental failure to grasp the seriousness of the alleged offences, such as putting children “at risk”.

Westpac also declined to comment in detail because the case was in the court system.

However, a spokesman denied the bank was seeking to downplay its conduct, noting it had admitted to most of the 23 million transgressions alleged by Austrac. “Westpac accepts the gravity of the issues raised by the Austrac claim,” he said.

Despite reaching agreement on the substance of most of the charges, the two parties remain at loggerheads over an appropriate penalty.

Attorney-General Christian Porter attacked suggestions put by bankers that breaches of anti-terrorism laws were ‘victimless’. Picture: AAP

The bank has already set aside $900m, but Austrac is believed to be seeking as much as $1.5bn.

The Attorney-General took the opportunity to target Mr McFarlane’s commentary last month on the penalty issue, only weeks after he became chairman following a clean-out of the Westpac board and senior management.

Mr McFarlane, a former ANZ Bank chief executive, reportedly said that any penalty “needed to be based on the facts as to what has actually gone wrong”, and that Westpac was “pretty much experts” in the facts.

Mr Porter noted that only eight days later, on June 12, Westpac had disclosed that Austrac was seeking further information and could amend its statement of claim. “Any assertion that only Westpac has all the facts relating to this matter demonstrates the sort of arrogance and lack of understanding that led to the alleged breaches arising in the first place,” he said.

“The proposition put by bankers in media articles that these breaches of the anti-money-laundering and counter-terrorism laws are predominantly or essentially victimless demonstrates a fundamental failure to grasp the seriousness of the alleged breaches and public expectations.

“Whichever anonymous banker described the alleged offending as victimless does not deserve to be working in the industry and has failed to grasp the fact children can be put at risk by the type of breaches alleged.”

Westpac rejected any suggestion that it had claimed Austrac was trying to bully the bank into settling for an unreasonable amount. “In fact, (Mr McFarlane) was reported as saying: ‘Clearly, there is going to be a penalty here which will be material, we understand that this is a serious matter and you have to take the consequence of it’,” the spokesman said.

A Westpac insider told The Australian “the bank has always pushed the envelope legally. It’s culturally been the MO as long as I’ve worked here”.

In a final critique of the bank’s approach to its Austrac entanglement, Mr Porter said recent quotes from senior anonymous bankers and Westpac leadership in media articles “could easily be construed as a co-ordinated and largely self-serving attempt by bankers at attacking the regulator for doing its important job”.

This included enforcement of money-laundering laws enabling the investigation and deterrence of serious crimes, including protection of children from abuse.

Westpac said in a statement to the Australian Securities Exchange on Tuesday a large proportion of its latest Austrac reporting issues related to a range of complex scenarios. The scenarios required the bank to exercise judgment on how multiple transactions could be aggregated, and whether or not a threshold transaction had actually occurred.

Westpac said it was continuing to engage with Austrac and the number of outstanding issues could change.

Federal Court judge Jonathan Beach, who is hearing the case, has said a trial will proceed next year if there is no settlement.

Justice Beach has urged Austrac to finalise its case against Westpac as soon as possible.