The Australian Transaction Reports and Analysis Centre (AUSTRAC) and Westpac have agreed to a proposed penalty of $1.3 billion over Westpac’s breaches of Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) reflecting the seriousness and magnitude of compliance failings by Westpac. The Federal Court of Australia will now consider the proposal and if approved, the penalty order made will represent the largest-ever civil penalty in Australian history. 

With this penalty settlement, Westpac has admitted to contravening the AML/CTF Act on over 23 million occasions, exposing Australia’s financial system to criminal exploitation. Westpac has 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.

AUSTRAC’s Chief Executive Officer, Nicole Rose PSM believes the settlement sends a strong message to the industry that AUSTRAC will take strict action to ensure that Australia’s financial system remains strong and cannot be exploited by criminals. She said, “Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac’s non-compliance.”

AUSTRAC (the Australian Transaction Reports and Analysis Centre) is the Australian Government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system to protect the community from serious and organised crime.

Date: 24 Sep 2020

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