Austrac, Westpac yet to agree on money-launder breaches

Westpac and Austrac are yet to sign off on a shortened version of agreed facts over the bank’s ­alleged ­financial crimes law breaches.

Westpac and Austrac are yet to sign off on a shortened version of agreed facts over the bank’s ­alleged 23 million breaches of ­financial crimes law, despite aiming to have a document lodged with the court on Friday.

The parties were asked by the Federal Court to lodge a short-form version of agreed facts on May 8, but instead of it arriving the court was informed of a delay.

The shortform agreement was meant to be followed with a defence by Westpac — lodged on May 15 — on the outstanding points of difference with regulator Austrac.

Sources said while a shortened version of agreed facts was still possible ahead of Friday, there was also a chance the documents may merge.

Westpac has set aside $900m for a potential penalty on the Austrac action, but the regulator has been rumoured to want a figure closer to $1.5bn.

Westpac has previously disputed Austrac’s claims that management were indifferent to the compliance shortcomings and there was “inadequate oversight” by the board.

In November, Westpac’s board said: “Based on its current understanding, the board does not believe that there has been any indifference by any member of the executive team, including the CEO, but accepts that Westpac has fallen short of its own and regulatory expectations and that a detailed review is required.”

Westpac’s interim results last week admitted there was “considerable uncertainty” on the approach the court might take to the bank’s penalty. The accounts also revealed Westpac had been late in reporting almost 18,000 threshold transaction reports to Austrac. The bank warned that that figure could rise to between 60,000 and 90,000 unreported threshold transaction reports to the regulator.

The document said Westpac identified “deficiencies in certain systems and controls” over a number of years for threshold transaction reports.

Austrac classifies a “threshold transaction” as the transfer of funds of $10,000 or more. It specifies that reporting entities must report these transfers to Austrac in a threshold transaction report within 10 business days.

Westpac’s accounts said it was keeping Austrac “apprised of the status of its investigations” of the threshold transaction reports in question, but cautioned it could face further enforcement action.

The bank also faces two local class actions and one launched in the US relating to its anti-money-laundering compliances failures. The banking and corporate regulators separately are investigating aspects of Westpac’s conduct, including its obligations under the Banking Act and its continuous disclosure obligations.

National Australia Bank and Bendigo and Adelaide Bank also have ongoing matters to resolve with Austrac. NAB has said it is working with the regulator on “certain weaknesses” with the implementation of the Know Your Customer legal requirements.