In December, the Australian Prudential Regulation Authority (APRA) formally commenced an investigation into the conduct that led to Westpac’s alleged contraventions of anti-money laundering laws flagged by financial crime regulator AUSTRAC, as well as the bank’s actions to rectify and remediate the issues after they were identified.
The investigation involved examining whether Westpac, its directors and/or its senior managers breached the Banking Act – including the Banking Executive Accountability Regime (BEAR) – or contravened APRA’s prudential standards.
However, APRA has announced that it has delegated certain enforcement powers to the Australian Securities and Investments Commission (ASIC), which is currently conducting its own investigation into Westpac’s conduct.
According to APRA, the regulators determined that there is the potential for a “significant overlap” of the factual background as well as any legal contraventions under the Corporations Act 2001 and the Banking Act.
“To avoid both agencies separately investigating and potentially litigating related matters, ASIC will consider whether the conduct that it is investigating also gives rise to contraventions of the accountability obligations under the Banking Executive Accountability Regime and standards of fitness and propriety under the Banking Act,” APRA stated.
APRA has provided ASIC with the authority to apply to the courts for fines and disqualification of individuals – as outlined in the Banking Act – for the purpose of the investigation.
“This will allow ASIC to take court action which it considers appropriate as a result of its investigation,” APRA added.
“ASIC will, however, consult and collaborate with APRA in relation to any such proceedings.”
ASIC is yet to determine whether it will take enforcement action against Westpac.
Westpac filed its defence in response to AUSTRAC’s statement of claim on 15 May, admitting to the non-reporting of International Funds Transfer Instructions (IFTIs) and associated tracing information failures, record-keeping failures, ongoing customer due diligence failures, and failures regarding correspondent banking obligations. It also accepted the gravity of the claims.
However, AUSTRAC has since informed Westpac that it may amend its statement of claim to include new allegations arising from an internal review conducted by the bank.
Westpac reported additional suspicious matter reports in relation to potential child exploitation filed as part of Westpac’s lookback in its response to AUSTRAC’s claims.
AUSTRAC has requested further information from Westpac on these matters, including in relation to the threshold transaction report issues and 272 customers.
[Related: Westpac under more AUSTRAC investigation]