Westpac has agreed to pay AUSTRAC (the Australian Transaction Reports and Analysis Centre) $1.3 billion in fines, the largest in Australian corporate history.
The penalty was incurred after AUSTRAC found that Westpac had committed more than 23 million violations against anti-money laundering and counter-terrorism laws.
CEO Peter King commented in a statement that the bank is “committed to fixing the issues to ensure that these mistakes do not happen again.”
“Westpac is taking action to address the areas where we have failed and are implementing all the recommendations of the Advisory Plan Report”, Mr King said. “Westpac has made substantial investments to strengthen its systems, processes and controls to detect and report suspicious interactions”.
The statement of agreed facts and admission report outlined how the bank had failed to pass on information to AUSTRAC regarding money transfers overseas as well as disclosing foreign cash being transferred to Australia.
The report also alleged that Westpac was complicit in the activities of child exploitation by failing to implement appropriate transaction monitoring detection scenarios.
It has been reported that there are 262 suspected pedophiles who were potentially using Westpac’s fund transfers.
AUSTRAC chief executive Nicole Rose said in a statement that: “Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systematic nature of Westpac’s non-compliance.”
Ms Rose also confirmed that none of Westpac’s board members or executives had engaged in any criminal activity.
AUSTRAC began the civil proceedings against the bank in the Federal Court of Australia in November 2019.
The settlement between Westpac and AUSTRAC came after weeks of legal negotiations.
According to the ABC, Westpac had originally expected to pay $900 million in fines.
When the civil proceedings started last year, the previous chief executive of Westpac Brian Hartzer resigned amidst internal pressure.
The fine comes three years after the Commonwealth Bank of Australia agreed to pay $700 million for the breaches in the same anti-money laundering and counter-terrorism laws. At the time, it had been the biggest fine in Australian corporate history.
The long term impacts this fine will have on Westpac and Australia’s banking sector is yet to be determined.