AUSTRAC notifies Westpac it may amend its statement of claim

Maria Nikolova

AUSTRAC has requested further information from Westpac as part of its investigation.

Westpac today provided an update on AUSTRAC litigation.

As indicated earlier this month, Westpac filed its Defence to AUSTRAC’s Statement of Claim on 15 May 2020, in which it admitted to a substantial majority of the contraventions alleged by AUSTRAC.

Westpac says it has continued to review its processes and as part of that has disclosed to AUSTRAC issues regarding its obligation to file threshold transaction reports (previously disclosed in Westpac’s First Half 2020 Results Announcement). In addition, in December 2019 as part of the lookback announced in its response to AUSTRAC’s claim, Westpac reported additional SMRs in relation to potential child exploitation.

Westpac has now been informed by AUSTRAC that it is further investigating these matters and has notified Westpac it may amend its statement of claim to include allegations arising from these investigations. AUSTRAC has requested further information from Westpac on these matters, including in relation to the TTR issues and 272 customers, many of which were the subject of SMRs previously filed as part of the lookback.

There is a further case management hearing on June 17, 2020.

As FinanceFeeds has reported, on June 4, 2020, Westpac announced the results of its investigation into the Anti-Money Laundering and Counter- Terrorism Financing (AML/CTF) compliance issues, as well as releasing the Advisory Panel Report into Board Governance of AML/CTF Obligations and the Promontory Assurance letter on management’s accountability review.

The failure concerning International Funds Transfer Instructions (IFTIs) non-reporting was blamed on a mix of technology and human error dating back to 2009.

The failure properly to adhere to AUSTRAC guidance for child exploitation risk in respect of some products was explained through deficient financial crime processes, compounded by poor individual judgements.

Westpac has identified three primary causes of the AML/CTF compliance failures:

  • Some areas of AML/CTF risk were not sufficiently understood within Westpac;
  • There were unclear end-to-end accountabilities for managing AML/CTF compliance; and
  • There was a lack of sufficient AML/CTF expertise and resourcing.

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