Austrac on the defensive as blame game starts before Westpac hearing

Information is available to law enforcement within 24 hours, with ‘no delay’, says Austrac.

A case management hearing for Austrac’s explosive lawsuit against Westpac was postponed over the weekend. Picture: Getty Images

Westpac failed to provide the financial intelligence agency with information relating to international transactions later revealed to be child exploitation payments destined for Southeast Asia, Austrac chief executive Nicole Rose has told parliament.

The head of Austrac on Monday hit back at a series of reports over the weekend, described by Peter Dutton as a “hatchet job”, which had alleged the anti-money laundering agency had “potentially bungled” investigations into criminal activity by failing to alert enforcement agencies to key information “for more than a year”.

“Our information is available to law enforcement within 24 hours. There is no delay,” Ms Rose told a senate estimates hearing.

Ms Rose said the reports in the Daily Telegraph “alleges or alludes that Austrac may have held back information to enhance its civil case which is appalling”.

“As in many civil and criminal matters there can be parallel tracks of work done where criminality is disrupted and investigation goes on, and that is what has happened in this case,” she said.

A case management hearing for Austrac’s explosive lawsuit against Westpac slated for Monday, in which the bank is alleged to have breached anti-money laundering regulations 23 million times, was postponed over the weekend.

“We are midway through mediation,” Ms Rose said.

Ms Rose said Austrac was not able to detect all breaches of the law, and financial organisations are required by law to notify the regulator of failures of their obligations, which include sending the watchdog reports of suspicious matters and transactions.

“It’s not possible to detect them all. Particularly when we are talking about international transactions, and we are in this matter,” Ms Rose said.

“We are reliant on access to information both internationally and domestically and that is where we rely on our entities to provide us information under the act they are required to provide.”

Westpac ‘did not provide the information’

In this instance, Ms Rose said Westpac did not provide the information to Austrac.

“That’s what this whole court case is about,” she said.

Ms Rose said she was “Personally appalled by the articles and the errors within”.

“A couple of things concern me most importantly around the reputation of Austrac and that Austrac may have damaged in some way shape or form investigations into child sexual abuse. I think that is appalling and abhorrent,” she said.

“It alleges or alludes that Austrac may have held back information to enhance its civil case which is appalling. As in many civil and criminal matters, there can be parallel tracks of work done where criminality is disrupted and investigation goes on, and that is what has happened in this case.”

Austrac deputy chief executive Chris Collett said the regulator received 246,000 suspicious matter reports and 158 million transaction reports each year.

“We never hold information before making it available to police,” Mr Collett said.

“We don’t ever sit on them. It’s a matter of identifying them and prioritising them,” he said, noting that it would generally take between three to four days for an Austrac analyst to decide whether a suspicious matter report required further action.

Austrac lodged its claim against the bank in November, and Westpac is expected to face a fine of close to $1bn after failing to properly monitor billions of dollars in international money transfers, known as IFTIs, or report those transactions to regulators as part of accusations it breached anti-money-laundering reporting rules 23 million times.

Ms Rose recently helped secure a record-breaking $700m penalty over Commonwealth Bank’s 50,000 breaches of the law.

Last month, a confidential report read before parliament revealed the Westpac board was warned by a confidential internal review it was taking risks “outside of its appetite” with its anti-money-laundering compliance systems due to prolonged under-investment more than two years before Austrac launched legal action over the child exploitation scandal.

The banking and corporate regulators are conducting separate inquiries into the alleged breaches at Westpac.