Australian bank Westpac has been charged with more than 23 million contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act involving A$11 billion.
The Australian Transaction Reports and Analysis Centre (AUSTRAC), an Australian government financial intelligence agency set up to monitor financial transactions to identify money laundering, organised crime, tax evasion, welfare fraud and terrorism, alleges Westpac Banking Corp failed to report more than 19.5 million international funds transfer instructions it received over a period of five years. This related to money moving into and out of Australia over the duration.
AUSTRAC alleges Westpac “allowed correspondent banks to access its banking environment and the Australian Payments System without conducting appropriate due diligence”.
AUSTRAC requires banks to file International Funds Transfer Instructions to enable it to monitor risks impacting on Australia. It said Westpac failed to report more than 19.5 million International Funds Transfer Instructions.
AUSTRAC said in a statement that Westpac “has allowed correspondent banks to access its banking environment and the Australian Payments System without conducting appropriate due diligence on those correspondent banks and without appropriate risk assessments and controls on the products and channels offered as part of that relationship”.
Some of the reports related to potential child exploitation risk and these mainly relate to the Philippines and south-east Asia.
Westpac failed to “carry out appropriate customer due diligence on transactions to the Philippines and South East Asia that have known financial indicators relating to potential child exploitation risks,” AUSTRAC said.
The bank is said to have failed to “pass on information about the source of funds to other banks in the transfer chain”.
In a very brief statement before reporters at Parliament House, AUSTRAC CEO Nicole Rose described Westpac’s behaviour as “serious and systemic non-compliance”.
“These AML-CTF laws are in place to protect Australia’s financial system, businesses and the community from criminal exploitation.”
The penalty will be decided by the Federal Court. The legislation specifies a penalty of A$210 per breach but courts limit the amount of penalties when very large number of breaches are involved and penalties are made in-line with the level of offending as determined by the court.
The Commonwealth Bank paid A$700 million to settle its proceedings against AUSTRAC, which related to failures around filing ‘suspicious matter reports’, involving large amounts of cash.
Westpac had previously disclosed to the Australian Stock Exchange in its full-year 2018 accounts and its 2019 half-year accounts that it could be fined for failure to report a large number of International Funds Transfer Instructions as required under the law.