Australia’s second-biggest bank, Westpac, has been accused of 23 million breaches of anti-money laundering and counterterrorism financing laws.
Westpac is likely to be hit with huge fines. The Australian banking giant is facing legal action from regulators who claim it flouted anti-money laundering and counterterrorism financing laws.
Investigators allege that Westpac allowed institutions from countries including Iraq, Lebanon, Zimbabwe and the Democratic Republic of Congo access into Australia’s financial sector without proper checks.
This, according to the watchdog, potentially allowed criminals and terrorists to transfer money into or out of Australia.
The Australian Transaction Reports and Analysis Center, or AUSTRAC, the country’s financial crime agency, has also alleged that Westpac failed to properly monitor thousands of transactions that could be linked to child exploitation in the Philippines. It also claimed the bank ignored warnings and for years enabled suspicious payments from convicted child sex offenders.
“Westpac failed to carry out appropriate customer due diligence on high-high-rise transactions to the Philippines and Southeast Asia concerning known financial indicators relating to potential child exploitation risks,” said Nicole Rose, AUSTRAC’s chief executive.
The U.S.-born boss of Westpac said the bank “should have done better” and promised to fix the problems.
Brian Hartzer says he was “disgusted” by the revelations but rejects the claim the bank has not treated the breaches seriously.
“We have absolutely not been indifferent on this topic,” he said. “So I just want to be really, really clear that as far as I am concerned at a senior executive level, for the board, for me personally, in no way have we been indifferent on this.”
In theory, Westpac could face multimillion dollar fines for each of the breaches, which could add up to a staggering penalty of $328 trillion U.S. Analysts, though, expect a “meaningful, painful but not catastrophic civil penalty” to be handed down by Australia’s Federal Court.
Last year, the Commonwealth Bank agreed to pay the biggest fine in Australian corporate history of $476 million U.S. for breaches of anti-money laundering and counterterrorism financing laws that resulted in vast amounts of cash going to drug traffickers.
Earlier this year, a public inquiry exposed widespread wrongdoing in Australia’s finance industry.