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Major bank ‘accepts the gravity’ of AUSTRAC claims

A big four bank has filed its defence to AUSTRAC’s claims that it had breached AML/CTF obligations, stating it “accepts the gravity” of the claims and admitting several breaches.

Westpac has filed its defence with the federal court in relation to AUSTRAC’s allegations that it contravened its obligations under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act in more than 23 million instances.

Earlier this year, the major bank revealed that it had been in discussions with the Australian Transaction Reports and Analysis Centre (AUSTRAC) to agree on a Statement of Agreed Facts and Admissions, alongside a proposed penalty that could be put to the court on a joint basis with AUSTRAC.

The bank has now filed its defence in response to AUSTRAC’s statement of claim, admitting to the non-reporting of IFTIs and associated tracing information failures, record-keeping failures, ongoing customer due diligence failures, and failures regarding correspondent banking obligations.

However, the bank’s defence “also provides some explanation and clarity around a number of the allegations, for example, about the nature of the transaction monitoring and correspondent banking assessments Westpac carried out at the time”, the bank said in a statement.

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These include that the bank did perform some level of due diligence on the 12 customers who made transactions consistent with child exploitation and said that the vast majority of its international transfers were correctly reported. It also hit back at AUSTRAC for supposedly approving of its compliance in 2016 and said that it performed risk assessments on correspondent banks. 

Westpac accepts the gravity of the issues raised by the AUSTRAC claim and has made a large number of admissions in its response to the Statement of Claim,” the bank said in a statement.

“Westpac acknowledges that financial crime is a serious threat to society and is determined to continue to lift its standards and meet its anti-money laundering and other financial crime obligations,” the statement continues.

Westpac and AUSTRAC are continuing to discuss a Statement of Agreed Facts and Admissions.

The bank revealed earlier this year that it expects to make a provision of $900 million for its potential liability in relation to the AUSTRAC claim, approximately $200 million more than CBA ended up paying for recent AML/CTF breaches.

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However, Westpac’s actual penalty paid could be higher or lower than the provisions it has made.

Executive changes

The major bank has also recently announced several executive changes, including the departure of the chief executive of its consumer banking division.

Westpac Group has announced yesterday (19 May) that David Lindberg, chief executive, consumer, and Craig Bright, chief information officer, will be leaving the bank to assume new roles overseas.

Mr Lindberg, who joined Westpac from the Commonwealth Bank of Australia in 2013, has served as head of retail since April 2019.

The outgoing executive has held a number of senior roles at the bank, which included a stint as chief executive, commercial and business bank.

Mr Bright has served as chief innovation officer since December 2018. Prior to joining Westpac, Mr Bright served as global chief technology officer at Citigroup.

Westpac stated that it has commenced an international search for Mr Lindberg and Mr Bright’s replacements.

Meanwhile, the bank also announced the appointment of Les Vance to a new role as group executive, financial crime, compliance and conduct.

Mr Vance will be charged with overseeing the group’s financial crime, compliance and conduct management.

According to Westpac, Mr Vance’s appointment would allow chief risk officer David Stephen to focus on the financial risk management of the organisation, particularly across the credit portfolio, amid the ongoing COVID-19 crisis.

Mr Vance currently serves as chief operating officer, consumer division.

[Related: Westpac sets aside $900m for AUSTRAC proceedings]

Major bank ‘accepts the gravity’ of AUSTRAC claims
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