AUSTRAC Ups Ante in Westpac Money Laundering Case

AUSTRAC has requested information from Westpac on additional child exploitation cases the bank detected in its lookback, potentially to use in penalty negotiations.

AUSTRAC may amend its statement of claim against Westpac to include additional AML breaches detected as part of the bank’s internal review of its financial crime compliance processes.

AUSTRAC filed civil penalty orders in Federal Court against Westpac in November 2019, alleging over 23 million contraventions of the AML/CTF Act, including transactions consistent with child exploitation.

As part of Westpac’s response plan, the bank undertook a further review of its processes for detecting and reporting high-risk transactions, and found thousands more potential AML breaches.

“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,” Westpac said in a 12 June ASX filing.

In particular, AUSTRAC has requested further information from Westpac in relation to 272 customers, many of which were the subject of suspicious matter reports filed as part of the bank’s lookback into child exploitation risks.

Last month, in its defence filed in Federal Court against AUSTRAC’s original statement of claim – which referenced 12 customers linked to child exploitation – Westpac admitted to record-keeping, customer due diligence and correspondent banking failures.

Earlier this month, Westpac released the findings of its internal probe, attributing the failures to technology failures, human error, resource constraints and other deficiencies in its financial crime processes.

AUSTRAC and Westpac have been engaged in negotiations to determine a settlement for the breaches. AUSTRAC is seeking a AUD 1.5 billion settlement, while Westpac is said to be unwilling to pay more than the AUD 900 million it has already provisioned for the potential penalty.

Local reports suggest that AUSTRAC may be looking to use the additional child exploitation cases as a negotiation tool, in the knowledge that the release of such details would lead to a public relations nightmare for Westpac.

A further case management hearing is scheduled for 17 June.