20 Nov 2019
Australian financial crime watchdog, AUSTRAC, has applied for civil penalty orders against Westpac bank over 23 million instances of money laundering failures.
Westpac had made 23 million breaches of Australian Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws, resulting in “serious and systemic non-compliance”, AUSTRAC said on Wednesday.
Around 19.5 million international fund transfers amounting to $11 billion were not reported to the regulator.
AUSTRAC alleges Westpac also failed to carry out due diligence on transactions to the Philippines and South East Asia with recognised child exploitation indicators.
And, AUSTRAC says Westpac didn’t introduce any measures to detect the known child exploitation processes.
In an explanatory document, AUSTRAC said there were 12 Westpac customers in particular who should have been watched closely, due to child exploitation risks, and that Westpac knew about the risks since 2013.
“Over a number of years, there were repeated patterns of frequent low value transactions on accounts held by each of these 12 customers that were indicative of child exploitation risks. Since at least 2013, Westpac was aware of the heightened child exploitation risks associated with these patterns of transactions,” the statement read.
Despite this, AUSTRAC claims Westpac did not implement appropriate detection scenarios until June last year.
“Had Westpac been applying appropriate automated detection scenarios across all channels, this highly suspicious activity would have been identified sooner. Some of the undetected transactions involved payments to alleged or suspected child exploitation facilitators.”
AUSTRAC claimed one customer had opened several accounts after serving time for child exploitation, and while Westpac quickly identified suspicious behaviour on one account, failed to quickly review the other accounts.
The customer continued to send payments to the Philippines through the bank.
“These AML/CTF 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,” AUSTRAC CEO Nicole Rose said.
The regulator said the major bank failed to report more than 19.5 million International Funds Transfer Instructions (IFTIs) to AUSTRAC over five years, and that information about these transfers provides “vital information” needed to protect the Australian banking sector and Australian community from harm.
“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.”
By Lucy Dean, Yahoo Finance AU, 19 November 2019
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