Westpac and AUSTRAC agree to $1.3bn penalty over breaches of AML/CTF Act

Maria Nikolova

If the Federal Court determines the proposed penalty is appropriate, the penalty order made will represent the largest ever civil penalty in Australian history.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) and Westpac have today agreed to a $1.3 billion proposed penalty over Westpac’s breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

The Federal Court of Australia will now consider the proposed settlement and penalty. If the Federal Court determines the proposed penalty is appropriate, the penalty order made will represent the largest ever civil penalty in Australian history.

As part of the agreement, Westpac has admitted to contravening the AML/CTF Act on over 23 million occasions, exposing Australia’s financial system to criminal exploitation. In brief, Westpac admitted that it failed to:

  • Properly report over 19.5 million International Funds Transfer Instructions (IFTIs) amounting to over $11 billion dollars to AUSTRAC.
  • Pass on information relating to the origin of some of these international funds transfers, and to pass on information about the source of funds to other banks in the transfer chain, which these banks needed to manage their own ML/TF risks.
  • Keep records relating to the origin of some of these international funds transfers.
  • Appropriately assess and monitor the risks associated with the movement of money into and out of Australia through its correspondent banking relationships, including with known higher risk jurisdictions.
  • Carry out appropriate customer due diligence in relation to suspicious transactions associated with possible child exploitation.

In addition, Westpac has admitted to approximately 76,000 additional contraventions which expand the original statement of claim. These new contraventions relate to information that came to light after the civil penalty action was launched last year and relate to additional IFTI reporting failures, failures to reasonably monitor customers for transactions related to possible child exploitation, and two further failures to assess the money laundering and terrorism financing risks associated with correspondent banking relationships.

AUSTRAC’s Chief Executive Officer, Nicole Rose PSM said such a large number of breaches over several years was unacceptable and could have been avoided with better assurance and oversight processes to identify ongoing reporting failures.

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