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HomeAll NewsMost read newsBusiness Leaders Biography
Age : 49
Public asset : 1,591,873 USD
Linked companies : Westpac Banking Corporation
Biography : Currently, Peter Francis King occupies the position of Chief Executive Officer, Director & MD at Wes

Westpac Agrees to Pay A$1.3 Billion Fine for Austrac Breaches -- Update

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09/23/2020 | 06:25pm EDT

By Alice Uribe

SYDNEY--Westpac Banking Corp. has agreed to pay a 1.3 billion Australian dollar (US$920 million) fine to settle a civil case related to the biggest breach of the Australia's money-laundering and terrorism financing laws in history.

Australia's second-largest bank on Thursday said it had reached an agreement with Australia's financial-intelligence agency relating to more than 23 million breaches of the Anti-Money Laundering and Counter-Terrorism and Financing Act 2006. The breaches include failing to detect transfers that may have been used to facilitate child exploitation in Asia and failing to report in a timely way about US$7.5 billion in international transfers.

As part of the agreement with the Australian Transaction Reports and Analysis Centre, or Austrac, Westpac said it had admitted to additional contraventions. These are in an amended statement of claim, and contributed to the penalty, the bank said.

Austrac first took action against Westpac in the Federal Court in November last year. The breaches led to the departure of Chief Executive Brian Hartzer and Chairman Lindsay Maxsted's early retirement.

Westpac Chief Executive Peter King, who replaced Mr Hartzer, apologized for the failings and said the bank is "committed to fixing the issues to ensure that these mistakes do not happen again."

In June, Westpac released the findings from its investigation into the AML/CTF compliance issues as well as the Advisory Panel Report on governance and accountability.

Westpac identified three main causes of the compliance failures. Some areas of money laundering and counter-terrorism financing risk weren't sufficiently understood within the company, Westpac said. There were also "unclear end-to-end accountabilities for managing AML/CTF compliance and there was a lack of sufficient AML/CTF expertise and resourcing," it added.

The investigation also concluded that directors could have recognized earlier the systemic nature of some of the financial-crime issues that Westpac was facing. A total of 38 employees have taken a hit to their pay, including bonuses being withheld. Some staff have been disciplined, Westpac said at the time.

Mr. King said Westpac is implementing all the recommendations of the Advisory Panel Report.

"We have recruited about 200 financial crime people to the group, created a new Group Executive position directly responsible for improving our financial crime capability, and established a new Board Legal, Regulatory and Compliance subcommittee," he said.

Westpac in its first-half result provided for an estimated penalty of A$900 million, and associated costs. This has now been increased by a further A$404 million.

"The penalty that Westpac and Austrac will recommend to the court reflects the outcome of ongoing review and dialogue with Austrac," said Westpac.

In 2017, Commonwealth Bank of Australia's chief executive agreed to resign after the bank was hit by allegations by the financial-intelligence agency of years of compliance breaches that had allowed its banking machines to be used for money laundering by drug dealers and other criminals. The bank, the country's biggest by market value, agreed to settle the case and pay an A$700 million fine, then the biggest corporate civil penalty ever paid in Australia.

 

Write to Alice Uribe at alice.uribe@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.29% 0.94022 Delayed Quote.2.84%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.03% 74.703 Delayed Quote.-1.91%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) -0.06% 1.0663 Delayed Quote.2.23%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.22% 0.6456 Delayed Quote.-4.87%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.09% 0.71248 Delayed Quote.1.65%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.14% 1.82782 Delayed Quote.-3.37%
COMMONWEALTH BANK OF AUSTRALIA -0.27% 69.71 End-of-day quote.-12.75%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) -0.21% 1.65785 Delayed Quote.3.97%
WESTPAC BANKING CORPORATION -0.43% 18.7 End-of-day quote.-22.82%
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