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Westpac has been served with another class action suit, off the back of undisclosed issues relating to the banks’s monitoring of financial crime, and the subsequent AUSTRAC investigation into the matter.
Johnson Winter & Slattery has announced that it has filed a class action suit in the Federal Court of Australia against Westpac and “one of its prior executives”, on behalf of certain shareholders, over “alleged systematic non-compliance” with anti-money laundering and counter-terrorism financing (AML/CTF) laws.
The law firm did not disclose the amount of damages sought, nor identity the aforementioned “prior executive” related to the claim.
The case is the latest in a series of class actions brought against the major bank, following on from Australia’s anti money-laundering and terrorism financing regulator, AUSTRAC, filing civil penalties against Westpac, over an alleged 23 million breaches of AML/CTF laws.
According to Westpac’s release to the ASX on the matter, the suit is being pursued on behalf of “certain shareholders”, who acquired an interest in Westpac securities or equity swap confirmations between 16 December 2013 and 19 November 2019 (the day before AUSTRAC’s case against the bank was announced).
“The claim relates to market disclosure issues connected to Westpac’s monitoring of financial crime over the relevant period and matters which are subject to the AUSTRAC proceedings…” the release stated.
According to Westpac, the new action “covers similar subject matter” to the claim previously filed by Phi Finney McDonald in December 2019.
At the time that Phi Finney McDonald announced the first class action suit, it stated that between the close of trade on 19 November 2019 and the close of trade on 22 November 2019, Westpac’s share price on the ASX fell by approximately 7 per cent.
As such, the litigators alleged that Westpac breached its continuous disclosure obligations by failing to inform investors that:
- Westpac had “systemic faults and failures” in identifying AML/CTF risk and there was “serious and systemic non-compliance” with the AML/CTF Act;
- Westpac’s “serious non-compliance” with its AML/CTF obligations included the “failure to monitor certain customers transacting on accounts in a manner generally accepted to be indicative of child exploitation typologies”; and
- Westpac was potentially exposed to enforcement action by AUSTRAC in respect of its “serious and systemic non-compliance” with the AML/CTF Act, which might result in Westpac being ordered to pay a substantial civil penalty.
It was also alleged that Westpac engaged in “misleading and deceptive conduct” by representing to the market that Westpac:
- had effective policies, procedures and systems in place for ensuring compliance with the AML/CTF Law, and that it was in compliance with that law;
- to the extent it had identified improvements required for compliance with AML/CTF Law, this was not due to systemic flaws or deficiencies by Westpac, and it had publicly disclosed all matters relating to the IFTI failures relevant to any AUSTRAC action; and
- had policies, procedures and systems in place to ensure material matters were notified to the ASX and NZX, and that it had complied with its continuous disclosure obligations.
The second suit was filed in February 2020 by US-based litigator Rosen Law Firm, which alleged that Westpac made false and/or misleading statements and/or failed to disclose that:
- it failed to report over 19.5 million international funds transfer instructions to financial crime regulator AUSTRAC;
- it did not appropriately monitor and assess the ongoing money laundering and terrorism financing risks associated with movement of money into and out of Australia;
- it did not pass on requisite information about the source of funds to other banks in the transfer chain;
- despite being aware of the heightened risks, it did not carry out appropriate due diligence on transactions in south-east Asia and the Philippines that had known financial indicators relating to child exploitation risks;
- its AML/CTF program was inadequate to identify, mitigate and manage money laundering and terrorism financing risks; and
- as a result, its statements about its business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
In all cases, including the most recent, Westpac has stated it will be defending the claims.