- Westpac Banking Corporation (WBC) has agreed to pay $1.3 billion to settle its case with AUSTRAC
- If the Federal Court of Australia considers the penalty appropriate, it will be the largest-ever civil penalty in the country's history
- Last year, AUSTRAC accused the banking giant of breaching anti-money laundering and counter-terrorism financing laws more than 23 million times
- Westpac has admitted to an additional 76,000 breaches, resulting in the recommended $1.3 billion penalty, higher than the bank's initial estimate of $900 million
- AUSTRAC CEO Nicole Rose PSM said the settlement sends a clear message that the regulator will take firm action to prevent the exploitation of the financial system
- Westpac Group CEO Peter King, who took the helm in April this year, apologised for the bank's failings and said his highest priority is ensuring similar breaches are not made again
- Westpac shares are 2.32 per cent down in early trade, worth $16.01
Westpac Banking Corporation (WBC) has agreed to pay $1.3 billion to settle its case with AUSTRAC in the Federal Court of Australia.
If the court considers the penalty appropriate, it will be the largest-ever civil penalty in the country's history.
Last year, the Australian Transaction Reports and Analysis Centre (AUSTRAC) accused the banking giant of breaching anti-money laundering and counter-terrorism financing (AML/CTF) laws more than 23 million times.
Westpac and AUSTRAC have filed a Statement of Agreed Facts with the Federal Court, in which the bank has admitted to an additional 76,000 breaches, resulting in a higher recommended penalty than initially forecast.
In its first half 2020 report, the bank estimated it would have to pay around an estimated $900 million in relation to the breaches.
Westpac and AUSTRAC have recommended to the Federal Court a civil penalty of $1.3 billion, reflecting the outcome of subsequent reviews and discussions. The bank will also pay AUSTRAC's legal costs, to the tune of $3.75 million.
AUSTRAC CEO Nicole Rose PSM said the settlement is a clear demonstration that the regulator will take firm action to prevent the exploitation of the financial system.
"Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac’s non-compliance," she said.
"Westpac’s failure to implement effective transaction monitoring programs, and its failure to submit International Funds Transfer Instructions reports to AUSTRAC and apply enhanced customer due diligence in relation to suspicious transactions, meant AUSTRAC and law enforcement were missing critical intelligence to support police investigations," Nicole continued.
"We have been, and will continue to work collaboratively with Westpac and all businesses we regulate to support them to meet their compliance and reporting obligations to ensure this doesn’t happen again in the future," she added.
Westpac Group CEO Peter King, who took the helm in April this year, apologised for the bank's failings and said his highest priority is ensuring similar breaches are not made again.
"We 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," The CEO stated.
"This agreement is an important step in the court process. It provides more certainty to all our stakeholders as we continue to implement the measures in our Response Plan and complete the implementation of recommendations from the reviews that have been conducted," he continued.
In June, the bank released its findings into a review of its AML/CTF compliance in addition to the Advisory Panel Report on governance and accountability.
Westpac has been investing in strengthening its financial crime capability and implementing all of the Advisory Panel Report recommendations, according to Peter King.
"We have recruited about 200 financial crime people to the group, created a new Group Executive position directly responsible for improving our financial crime capability, and established a new Board Legal, Regulatory and Compliance sub-committee,” he said.
"We have also undertaken a reassessment of our culture, governance and accountability and are embarking on a comprehensive, multi-year program to strengthen how we manage non-financial risk across the Group. This includes a significant investment in training to support our people to better identify, assess and manage risks," The Westpac leader stated.
"We are determined to continually lift our financial crime standards, comply with our obligations and uphold our customer, community, and regulatory expectations," he added.
Westpac shares are 2.32 per cent down in early trade, worth $16.01 at 10:32 am AEST.