Westpac, an Australian bank and financial services provider, has been charged for 23 million acts of breaking the counter-terrorism financing and anti-money laundering laws. The Australian Transaction Reports and Analysis Centre (Austrac), announced recently that the bank would have to pay about A$21 million as a penalty.
The second-biggest bank in Australia said that the problem “should have never occurred.” Westpac is not the first large bank in the country to be accused of violating the anti-money laundering laws. The regulator claims that the bank failed to report Austrac about international transactions within the stipulated time frames. According to reports, at least 19.5 million global financial transactions went unreported between 2013 and 2018.
Nicole Rose, Chief Executive of Austrac, said that Westpac’s inability to report full information of transfers has ruined “the integrity of Australia’s financial system,” and “hindered its ability to track down the origins of financial transactions when required to support police investigations”.
The financial watchdog added that the transactions could have sent over A$11 billion in and out of Australia. Westpac did not retain records of the transfers either. It also failed to be alert in critical situations, which was necessary when working with potentially risky overseas institutions.
Austrac informed that these risk-prone institutions were located in highly sensitive nations like Zimbabwe, Iraq, and Ukraine. The agency said that the bank allowed sanctioned or high-risk countries to gain access to the payment system in Australia via nested arrangements.
It also links some of these transactions to accounts with risks related to child exploitation. The bank’s lax automatic detection measures and its negligence in financial reporting, let the transactions pass freely without scrutiny.
Westpac bears the brunt
Soon after the news broke out, Westpac’s shares tumbled by 3.3 during the trade-in Sydney.
Brian Hartzer, it’s Chief executive, said that that the bank should have diagnosed and amended the problem sooner. He stated that it was disappointing for failing on the expectations of the regulators. The bank also could not hold itself up to its own standards. However, Hartzer said that the bank reported the issue to the regulator itself. It also revealed the regulatory issue with its shareholders while announcing the company’s annual results.
Last year, the regulator fined Commonwealth Bank A$700 million for its involvement in similar breaches. The royal commission is also indicating several malpractices in the Australian financial market, making the situation even more grim for regulatory bodies.