TL;DR: Westpac, Australia’s second-largest bank, was accused of 23 million violations of anti-money laundering (AML) laws by the country’s financial crimes agency, Australian Transaction Reports and Analysis Centre (AUSTRAC) in recent court filings. News of the allegations rocked the global legacy financial world, as AUSTRAC claimed the institution’s flouting of AML regulations included facilitating child exploitation and terrorism.
Westpac Faces 23 Million Money Laundering Violations
At the end of the American Civil War is to when Australia’s Westpac Banking Corp can trace back its financial history, more than 200 years ago. Since then, the Sydney-based bank has amassed more than 1,200 branches, thousands of ATMs, some 35,000 employees worldwide, annual revenues of $22 billion, and total assets closing-in on a trillion dollars. Products include everything from consumer, corporate, and investment banking to insurance, mortgages, and credit cards.
According to AUSTRAC, money laundering should be added to that dizzying array of services and statistics, … tens of millions of times, apparently, in the last five years, including violating the nation’s Counter-Terrorism Financing Act (CTF). “AUSTRAC alleges Westpac contravened the AML/CTF Act on over 23 million occasions,” the press statement noted.
The allegations detail Westpac failed to “appropriately assess and monitor the ongoing money laundering and terrorism financing risks associated with the movement of money into and out of Australia through correspondent banking relationships,” neglecting long-standing due diligence norms. For almost half a decade (2013-2018), the bank did not “report over 19.5 million International Funds Transfer Instructions (IFTIs) to AUSTRAC,” which involved “transfers [of funds] both into and out of Australia,” totaling more than $11 billion.
Lack of vigilance meant Westpac did not “keep records relating to the origin of some of these international funds transfers,” which AUSTRAC demanded were especially egregious from “transactions to the Philippines and South East Asia that have known financial indicators relating to potential child exploitation risks. Westpac failed to introduce appropriate detection scenarios to detect known child exploitation typologies, consistent with AUSTRAC guidance and their own risk assessments,” the agency stressed. The bank is apparently cooperating with investigators in an effort to tighten its procedures going forward.
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