Sunday, November 1, 2020

One of Australia’s biggest bank Westpac had warnings years ago on anti-money laundering breaches – Leaked Internal Memos

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Internal memos have revealed Australia’s second-biggest bank was warned years ago it had issues with anti-money-laundering laws.

The leaked memos said Westpac management did not take responsibility for overseeing the reporting of international transfers, The Australian reported.

Westpac was warned it was breaching anti-money-laundering laws long before financial crime regulator AUSTRAC began lodging cases against the big banks.

CEO Brian Hartzer stepped down on Tuesday after accusations the bank committed 23 million breaches of anti-money-laundering and counter-terrorism financing laws.

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AUSTRAC is pursuing Westpac in the Federal Court for allegedly failing to report millions of international fund transfers including payments allegedly linked to child exploitation in Southeast Asia.

The bank was first warned in June 2017 there was a ‘poor handover’ to management from the internal team who created the framework for dealing with anti-money-laundering laws.

Management was then ‘unfamiliar’ with the system the bank used to report international transfers.

There are allegations the bank breached laws 23 million times, including by allowing payments tied to child exploitation in The Philippines.

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It is believed the payments were facilitated despite the bank knowing customers were convicted paedophiles.

Westpac is believed to have failed to report more than 19.5million international fund transfer instructions to AUSTRAC over five years.

AUSTRAC chief Nicole Rose did not comment on the amount of a potential penalty, saying it was a matter for the courts.

But in its submission to the Federal Court, AUSTRAC noted that each of the 23 million breaches attracts a civil penalty between $17 million and $21 million, theoretically putting the bank on the hook for up to $483 trillion in fines.

The global economy was worth almost US$86 trillion ($127 trillion) in 2018, according to the World Bank.

Westpac’s value has plunged by $8billion since the breach was first announced on November 20.

The bank quickly slashed executive bonuses and shut down its international transfer platform LitePay due to the scandal.




Group Chairman Lindsay Maxsted said: ‘The Board accepts the gravity of the issues raised by AUSTRAC.

‘As was appropriate, we sought feedback from all our stakeholders including shareholders and having done so it became clear that Board and management changes were in the best interest of the Bank.’

The move to replace the CEO came after Mr Maxstead met with key investors on Monday who told him that not enough had been done to punish the executive team.

Mr Hartzer was given 12 months’ notice and will still get his $2.7million salary.

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He is the third top executive from the country´s four major banks to depart in the past 18 months as the Australian banking sector faces a wave of scandals.

‘As CEO, I accept that I am ultimately accountable for everything that happens at the bank,’ Mr Hartzer said in a statement.

‘And it is clear that we have fallen well short of what the community expects of us, and we expect of ourselves.’

Mr Hartzer will be replaced by Westpac´s current CFO, Peter King, as of December 2, who announced his retirement in September but will remain until a permanent replacement is appointed.

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