APRA has delegated some of its enforcement powers to the corporate watchdog, as the two agencies continue their investigations into AUSTRAC's allegations against Westpac.
To limit any overlap, the prudential regulator will hand over responsibilities to investigate any matters that contravene accountability obligations under the Banking Executive Accountability Regime (BEAR) and standards of fitness and propriety under the Banking Act to ASIC.
In November last year, AUSTRAC exposed 23 million money laundering breaches using Westpac's now-defunct international money transfer product LitePay, some which it explosively revealed related to child exploitation in the Philippines and Southeast Asia.
APRA commenced an investigation into possible breaches of the Banking Act and BEAR by Westpac in December last year, warning directors and senior executives could face fines and disqualifications as a result of the fund transfer breaches.
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The delegated functions and powers will allow ASIC to take court action where it sees appropriate, and apply for the fining and disqualification of individuals involved in the AUSTRAC matters. These relate to subclause 1(1) of Schedule 2 and section 21 of the Banking Act.
"This will allow ASIC to take court action which it considers appropriate as a result of its investigation," the prudential regulator said.
"ASIC will, however, consult and collaborate with APRA in relation to any such proceedings."
The decision to delegate will allow for greater efficiencies in the investigative process and a more coordinated regulatory outcome, APRA said.
"It will avoid significant duplication in the investigative process, including compulsory examinations of the same individuals in respect of the same matters, and will avoid the potential for two sets of court proceedings for the same conduct," it said.
"It is therefore likely to achieve a swifter and more effective regulatory response as a result."
It will also operate alongside APRA's supervisory review program, announced by the regulator in December, which is tasked with reviewing Westpac's risk management, governance, accountability, remuneration and culture.
"The additional $500 million capital requirement that APRA imposed on Westpac in December 2019 remains in place, while APRA completes its risk governance review," it said.
"This brings the total capital add-on that Westpac is holding to $1 billion."