AUSTRAC Given Two Month Deadline for New Westpac Claims

Source: Regulation Asia Editors, Regulation Asia 2020-06-18

Separately, APRA has delegated enforcement powers to ASIC, allowing it to seek fines or banning orders if Westpac is found to have breached banking laws.

AUSTRAC has been given a two month deadline to add any new allegations to its case against Westpac, reports the Sydney Morning Herald.

The deadline was ordered as AUSTRAC investigates suspicious transactions from 272 customers who may have been involved in child exploitation.

Last November, AUSTRAC accused Westpac of more than 23 breaches of AML/CTF laws – many of which the bank has admitted to – including a failure to properly vet thousands of suspicious payments potentially involving child exploitation.

As part of a review of its processes for detecting and reporting high-risk transactions, Westpac found thousands more potential AML breaches, which AUSTRAC is currently investigating and said it may include in an amended statement of claim.

According to Federal Court Justice Jonathan Beach, there was a need to draw a line under the claims against Westpac so the parties could move to a short trial and a discussion of penalties.

AUSTRAC and Westpac are said to be preparing to go to trial early next year. The key disagreement so far has been over whether Westpac had a sufficient AML/CTF compliance programme in place, a fundamental requirement under Australia’s AML/CTF Act 2006.

An agreement has yet to be reached on the penalty the bank will have to pay. Westpac has provisioned AUD 900 million for the potential penalty, while AUSTRAC is said to be seeking a settlement closer to AUD 1.5 billion.

Justice Beach ordered AUSTRAC to propose any amendments to its statement of claim to Westpac by mid-August and to file an amended version with the Court by early September.

The Westpac breaches have also prompted investigations from APRA (Australian Prudential Regulation Authority) and ASIC (Australian Securities and Investments Commission).

To avoid overlapping their respective probes and potential litigation, APRA has delegated enforcement powers to ASIC, allowing the corporate regulator to seek fines or banning orders if breaches of the BEAR (Banking Executive Accountability Regime) and standards of fitness and propriety under the Banking Act were found.

“APRA’s decision to delegate, made in consultation with ASIC, is designed to achieve greater efficiencies in the investigative process and a more coordinated regulatory outcome,” the banking regulator said on Wednesday.

“No decision has yet been taken by ASIC as to whether or not any enforcement action in this matter may be appropriate.”

Westpac in December 2019 was ordered to hold an additional AUD 500 million in capital requirement pending APRA’s risk governance review, on top of a AUD 500 million capital add-on the bank was ordered to hold in July 2019 to reflect higher operational risk.

AUSTRAC Given Two Month Deadline for New Westpac Claims

Subscribe to Our Newsletter!

Subscribe to Our Newsletter!