AUSTRAC digs in on Westpac anti-money laundering case
Financial intelligence regulator AUSTRAC is digging in over
its massive anti-money laundering case against Westpac, as talks continue over
a potential settlement that could result in a penalty of almost $1 billion.
Westpac this week sought to draw a line under the saga after
last month admitting to most breaches, but on Friday AUSTRAC filed its response
to the bank's defence, with the regulator locked in disagreement with Westpac
on a technical but important point.
When AUSTRAC last year accused Westpac of breaching
anti-money laundering and counter-terrorism financing (AML/CTF) laws 23 million
times, one argument it made was that Westpac's compliance program did not have
the primary purpose of managing and mitigating laundering risks.
Westpac has already admitted to more than 23 million
breaches, including failures to adequately monitor 12 customers who allegedly
made suspicious transactions fitting the pattern of payments for child
exploitation. However, its defence last month denied the specific claim
relating to its AML program, referring to documents on its anti-money
laundering policies.
On Friday, AUSTRAC's reply in the Federal Court signalled it
was sticking with the allegation on the bank's AML program, as the court set
down the next case management hearing for mid-June.
The disagreement comes as the bank is attempting to move on
from the explosive case, which has sparked a major management shake-up in the
country's oldest bank.
Westpac has signalled it wants to settle the matter, and it
provisioned for a potential penalty of $900 million earlier this year, but
chief executive Peter King this week acknowledged there were still matters of
disagreement with AUSTRAC.
"We're still talking, but given there's a few matters
where we haven't been able to agree, the court process continues in parallel to
us talking and mediating," Mr King said in an interview on Thursday,
before AUSTRAC's latest court filing.
"We continue to work at it, I can't give you a
time-frame of when we might resolve that."
Westpac this week released the findings of its own
investigation into the compliance breaches, with two major investigations
blaming technology failures, misjudgments and poor systems for the breaches.
Chairman John McFarlane on Thursday said the bank needed to
get agreement on the facts of the matter with AUSTRAC, and the $900 million
provision was at the top end of the advice it had received on the issue.
"We're not trying to save money here, we're trying to have the right thing
happen," Mr McFarlane said.
Meanwhile, as banks grapple with fallout from the pandemic,
Commonwealth Bank on Friday said new requests for home loan deferrals had
fallen about 30 per cent a week since peaking in March. The bank will no longer
automatically allow customers to defer payments, but borrowers can still
request a deferral.
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