Westpac scandal: Australian bank ‘breached anti-money-laundering laws 23 million times’, watchdog claims

Australia’s second-largest bank is accused of ignoring red flags and enabling payments from convicted child sex offenders in ‘high risk’ countries

Lawsuit claims Westpac knew of ‘heightened child exploitation risks’ in Philippines and other Southeast Asian nations but took no action

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Published: 11:43am, 20 Nov 2019Updated: 11:26pm, 20 Nov 2019

Australian regulators on Wednesday accused Westpac, the country’s second-largest bank, of 23 million breaches of anti-money-laundering laws, saying the bank ignored red flags and enabled payments from convicted child sex offenders and “high risk” countries for years.

The oversight failure led to deep systemic non-compliance with anti-money-laundering laws, financial crime watchdog Austrac said in a civil court filing.

The regulator is pursuing fines of up to A$21 million (US$14 million) for every transaction Westpac failed to monitor adequately or report on time.

The lawsuit dwarfs a case Austrac brought against larger Commonwealth Bank of Australia which agreed last year to pay a record A$700 million penalty after admitting to allowing 53,750 payments that violated similar protocols. It also brings fresh scrutiny to an industry still trying to rebuild community trust after a bruising public inquiry.

“These contraventions are the result of systemic failures in its control environment, indifference by senior management and inadequate oversight by the Board,” Austrac said in the court filing.

Westpac said it had self-reported the breaches to Austrac and had since shut down the service at the centre of the complaint which let customers and affiliate overseas banks process payments from Australia.

Brian Hartzer, Westpac CEO. Photo: Bloomberg