Source: US Global Legal Monitor
(Oct. 5, 2020) On September 24, 2020, the Australian Transaction Reports and Analysis Centre (AUSTRAC), “the Australian Government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system to protect the community from serious and organised crime,” announced that it had reached an agreement with the Westpac Banking Corporation (Westpac) for Westpac to pay a civil penalty of AU$1.3 billion (about US$919 million) for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). The proposed settlement and penalty was submitted to the Federal Court of Australia for approval. If approved, “the penalty order made will represent the largest ever civil penalty in Australian history.”
In the agreed statement of facts submitted to the Court, Westpac admitted it had failed to
- Properly report over 19.5 million International Funds Transfer Instructions (IFTIs) amounting to over $11 billion dollars [about US$7.8 billion] to AUSTRAC.
- Pass on information relating to the origin of some of these international funds transfers, and to pass on information about the source of funds to other banks in the transfer chain, which these banks needed to manage their own ML/TF risks.
- Keep records relating to the origin of some of these international funds transfers.
- Appropriately assess and monitor the risks associated with the movement of money into and out of Australia through its correspondent banking relationships, including with known higher risk jurisdictions.
- Carry out appropriate customer due diligence in relation to suspicious transactions associated with possible child exploitation.
AUSTRAC had initially identified a dozen specific customers who had made suspicious transactions to the Philippines that were indicative of child exploitation activities.
However, a further review of historical transactions by Westpac in conjunction with the regulator found a further 250 customers with suspicious transactions to the Philippines, South-East Asia or Mexico — all of which should have been picked up much earlier if Westpac had proper monitoring systems in place.
. . .
The scandal, which erupted in late 2019, forced the resignation of then Westpac chief executive Brian Hartzer and the retirement of chairman Lindsay Maxsted, along with other board and executive changes.
In a statement attaching the statement of agreed facts and admissions, Westpac’s current chief executive apologized for the contraventions and said “[w]e are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority. We have also closed down relevant products and reported all relevant historical transactions.”
In a joint press release, the Australian Attorney-General and the Minister of Home Affairs said that “AUSTRAC will continue to work closely with Westpac to ensure they have appropriate systems in place to identify, track and disrupt criminals and criminal networks.”