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APRA closes Westpac case, EU remains

APRA has closed its investigation of Westpac into possible breaches of the Banking Act 1959 in relation to allegations of breaches of anti-money laundering laws.

The Australian Prudential Regulation Authority (APRA) has closed its investigation into possible breaches of the Banking Act 1959, including the Banking Executive Accountability Regime (BEAR) by Westpac.

In December 2019, APRA formally commenced an investigation into possible breaches of the act by Westpac, revealing that it would focus on the conduct that led to alleged contraventions of anti-money laundering and counter-terrorism laws, which were flagged by anti-money laundering and terrorism financing regulator AUSTRAC, as well as the bank’s actions to rectify and remediate the issues after they were identified.

APRA had said at the time that the investigation would examine whether Westpac, its directors, and/or its senior managers breached the act (including BEAR) or contravened APRA’s prudential standards.

In November 2019, AUSTRAC announced that it was seeking civil penalty orders against Westpac over 23 million alleged breaches of anti-money laundering and counter-terrorism laws.

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In June 2020, APRA handed over its investigation of Westpac’s alleged breaches of the Corporations Act and the Banking Act to the Australian Securities and Investments Commission (ASIC), which was conducting its own investigation into Westpac’s conduct.

APRA said this delegation was done to avoid both agencies separately investigating and “potentially litigating” related matters.

The prudential regulator has now announced that it has determined to close its investigation “after having carefully considered the results of ASIC’s investigation”.

However, it added that Westpac remains subject to a court enforceable undertaking (CEU) to implement an integrated risk governance remediation plan to “uplift” risk governance across its business, with ongoing independent review over its progress.

Furthermore, APRA stated that the $1 billion operational risk capital add-on, which it said reflects the bank’s heightened operational risk profile, will remain in place until Westpac completes its remediation under the CEU to APRA’s satisfaction.

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Commenting on APRA’s decision, deputy chair John Lonsdale said: “Although the investigation has not found evidence of breaches of the Banking Act or the BEAR, APRA remains determined to ensure Westpac rectifies its risk governance weaknesses effectively and sustainably.

“Under the enforceable undertaking, Westpac has clearly defined executive and board accountabilities for the implementation of its integrated risk governance remediation plan. APRA will be holding Westpac to account for the delivery of the required improvements.”

In a statement to the ASX, Westpac noted APRA’s closure of the investigation into the major bank into matters related to the AUSTRAC proceedings. 

[Related: Westpac enforceable undertaking details revealed]

APRA closes Westpac case, EU remains
APRA closes Westpac case, EU remains
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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