The Westpac Banking Corp (ASX: WBC) share price could come under pressure as it faces scrutiny by regulators in New Zealand.
Westpac share price in focus
The ASX’s second biggest bank has, according to reporting by the Australian Financial Review, been hit by the Reserve Bank of New Zealand with a formal warning because it didn’t detect and report more than 8,000 international transactions over an eight-month period.
Those eight months relate to a period between July 2018 and February 2019.
Investors may remember that AUSTRAC had alleged 23 million breaches of the anti-money laundering and counter-terrorism financing laws by Westpac, and then fined it $1.3 billion last year.
So getting things right with reporting transactions is important.
What is RBNZ saying?
The AFR reports that RBNZ alleges that serious failings of Westpac’s prescribed transactions were discovered during an on-site inspection by the Reserve Bank’s anti money laundering and counter-terrorism financing supervision team.
In a statement, the RBNZ said: “WBC designed and configured its prescribed transaction reporting systems in a way that failed to detect and report all eligible international wire transfers, resulting in it failing to report almost 8,000 corporate transactions to overseas recipients between July 2018 and February 2019.”
The AFR also quoted the RBNZ deputy governor Geoff Bascand, who said: “This formal warning reflects the importance of the prescribed transaction reporting regime in building an intelligence picture across New Zealand’s financial system, and re-iterates the seriousness with which we view non-compliance with the AML/CFT Act.”
What to make of this for the Westpac share price
At the time of writing, Westpac shares are rising – perhaps in reaction to the Commonwealth Bank of Australia (ASX: CBA) FY21 result which included a huge $6 billion share buyback and an increased dividend.
But the big banks, including National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), are facing increasing regulatory pressure. They need to ensure they are doing the right thing at all levels of the business, both the culture and compliance.
After such a strong run of the Westpac share price over the last year, up 45%, I don’t think it represents good value. There are other ASX dividend shares I’d rather look at for my income portfolio.
