ASIC launches investigation into Westpac

More woe for Westpac as ASIC confirms it has commenced an investigation into the bank following AUSTRAC's actions in relation to money laundering.

An ASIC spokesperson told Financial Standard: "ASIC can confirm that it commenced an investigation on Thursday, 21 November 2019 concerning possible breaches of legislation it administers arising from AUSTRAC's actions in relation to Westpac."

As part of its response to AUSTRAC's statement of claim significant leadership changes have taken place at Westpac.

Brian Hartzer today stepped down as chief executive, with current chief financial officer Peter King stepping in as interim chief executive.

King will take over from December 2.

Hartzer has been given 12 months notice and will receive his full fixed remuneration for that period - amounting to $2.686 million. King will be remunerated at a fixed annual salary of $2.1 million.

While King steps up, chief operating officer Gary Thursby will act as chief financial officer.

Westpac Group chair Lindsay Maxstead is bringing forward his retirement to the first half of next year too.

The bank has been accused of 23 million breaches of anti-money laundering laws and counter terrorism laws.

AUSTRAC last week applied to the Federal Court seeking civil penalty orders against Westpac relating to "systematic" non-compliance with the Anti Money Laundering and Counter Terrorism Act 2006 on over 23 million occasions.

The bank said in a statement: "We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime processes are industry leading. As a major bank we play a critical role in helping law enforcement agencies prevent criminals from carrying out illegal activity."

Westpac has released a response plan outlining how it plans to address AUSTRAC's actions.

Consolidating different financial crime systems into a single, group wide technology solution was pointed to as part of the solution.

The bank also committed to developing a financial crime strategic plan shared with AUSTRAC and making a number of external appointments to change leadership of its risk and financial crime areas.

AUSTRAC alleges, among other things, Westpac failed to appropriately assess the online money laundering and terrorism financing risks associated with the movement of money into and out of Australia through correspondent banking relationships.

It also alleges the bank failed to report over 19.5 million International Funds Transfer Instructions to AUSTRAC over a five year period.  The regulator said these transactions represent over 72% of all incoming international funds transfers from November 2013 to September 2018 and amounts to over $11 billion.

Read more: AUSTRACASICAnti Money LaunderingAustraliaBrian HartzerLindsay MaxsteadPeter KingWestpac Group
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