Westpac (ASX: WBC) may be facing a fine of at least $700 million from AUSTRAC after alleged failure to report some transactions.
Westpac Banking Corporation, more commonly known as Westpac, is one of Australia’s ‘Big Four’ banks and a financial services provider headquartered in Sydney. It is one of Australia’s largest lenders to homeowners, investors, individuals (via credit cards and personal loans) and businesses.
Westpac’s AUSTRAC Troubles
AUSTRAC has alleged 23 million breaches of the anti-money laundering and counter-terrorism financing laws by Westpac.
According to the Australian Financial Review, AUSTRAC CEO Nicole Rose said the bank was deficient in multiple areas and failed to report 19.5 million international fund transfers over five years.
One of the worst payments of the claims was that allegedly 12 customers made a large number of low value payments consistent with the purchase of child exploitation materials. There were around 3,000 of these transactions which amounted to a total of $497,612 to the Philippines and other South East Asian countries.
AUSTRAC said these breaches were due to “systemic failures in its control environment, indifference by senior management and inadequate oversight by the board“.
The fine is yet to be decided, but Commonwealth Bank (ASX: CBA) got a $700 million from AUSTRAC for not reporting cash deposits at its ATMs on time.
At around midday yesterday, Westpac CEO Brian Hartzer said in a statement:
“These issues should never have occurred and should have been identified and rectified sooner. It is disappointing that we have not met our own standards as well as regulatory expectations and requirements.
“In relation to international funds transfer instructions (IFTIs), we have closed the ACM product and reported all the relevant transactions to AUSTRAC. The majority of the payments for which the reports were not generated were recurring, low value payments made by foreign government pension funds to people living in Australia.
We will shortly be reporting a small number of remaining IFTIs related to our LitePay product.”
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