Westpac faces 23 million breaches

Westpac is facing 23 million alleged breaches of anti-money laundering laws and counter terrorism laws.

AUSTRAC has 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.

AUSTRAC chief executive Nicole Rose said that AUSTRAC's decision to commence civil penalty proceedings was made following a detailed investigation into Westpac's non-compliance.

"These laws are in place to protect Australia's financial system, businesses and the community from criminal exploitation. Serious and systemic non-compliance leaves our financial system open to being exploited by criminals," Rose said.

"The failure to pass on information about IFTIs to AUSTRAC undermines the integrity of Australia's financial system and hinders AUSTRAC's ability to track down the origins of financial transactions, when required to support police investigations."

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.

"Westpac has allowed correspondent banks to access its banking environment and the Australian Payments System without conducting appropriate due diligence on those correspondent banks and without appropriate risk assessments and controls on the products and channels offered as part of that relationship," the regulator said.

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.

The bank is also accused of failing to pass on information about the source of funds to other banks in the transfer chain, keep records relating to the origin of some of the international transfers and carry out appropriate checks on transfers from nations where there is a potential child exploitation risk.

"[Westpac failed to] carry out appropriate customer due diligence on transactions to the Philippines and South East Asia that have known financial indicators relating to potential child exploitation risks," AUSTRAC said.

"Westpac failed to introduce appropriate detection scenarios to detect known child exploitation typologies, consistent with AUSTRAC guidance and their own risk assessments."

AUSTRAC said it has been working with the bank during the proceedings to help strengthen its anti-money laundering and counter terrorism processes and frameworks.

"Westpac disclosed issues with its IFTI reporting, has cooperated with AUSTRAC's investigation and has commenced the process of uplifting its AML/CTF controls," the regulator said.

Read more: AUSTRACWestpacNicole RoseAnti Money LaunderingCounter Terrorism Act
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