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- Westpac Banking Corporation (WBC) has been told by APRA it must increase its operational risk capital by an extra $500 million following the recent money laundering scandal
- APRA has launched its own investigation into the possible breaches
- The $500 million capital increase brings Westpacks total risk capital add-ons to hold to $1 billion
- Westpac is down 1.27 per cent on the market this morning, trading at $24.53 per share
Westpac Banking Corporation (WBC) has been told by APRA it must increase its operational risk capital by an extra $500 million following the recent money laundering scandal.
Last month, the banking giant came under fire by the Australian Transaction Reports and Analysis Centre (AUSTRAC) for breaches of anti-money laundering and counter-terrorism financing laws.
AUSTRAC also accused Westpac’s senior management of serious misconduct and failure to carry out proper due diligence on customer transactions, particularly to the Philippines and South East Asia.
Due to this, it found 23 million accounts of law breaches relating to money laundering and failure to monitor payments which could be potentially linked to child exploitation.
CEO Brian Hartzer departed his role last month after the allegations were brought to light.
The Australian Prudential Regulation Authority (APRA) has launched its own investigation into the possible breaches.
The $500 million risk capital increase brings Westpac’s total add-ons to $1 billion.
APRA Deputy Chair John Lonsdale says AUSTRAC’s statement contains serious allegations that question the prudential standing of Australia’s second-largest bank.
“While Westpac is financially sound, there are potentially substantial gaps in risk governance that need to be closed,” John said.
“Given the nature of the matters raised by AUSTRAC, the number of alleged breaches and the period of time over which they occurred, this will necessarily be an extensive and potentially lengthy investigation,” he added.
Westpac’s Chairman, Lindsay Maxsted, says Westpac accepts the gravity of the issues presented by AUSTRAC.
“As previously stated, these shortcomings are unacceptable and we are determined to urgently fix these issues and lift our standards,” Lindsay said.
“We will provide our full support to APRA through its investigation and review,” he added.
Westpac is down 1.27 per cent on the market this morning, trading at $24.53 per share at 11:59 AEDT.
