Westpac Banking Corporation (WBK - Free Report) will be paying a penalty of A$1.3 billion (about $920 million) to the Australian Transaction Reports and Analysis Centre (“AUSTRAC”) for failing to comply with the anti-money laundering and counter-terrorism financing laws.
The matter is now presented to The Federal Court of Australia to determine whether the proposed penalty is appropriate. Notably, the settlement marks the largest ever civil penalty in Australia’s history.
Allegedly, Westpac failed to properly pass on information to AUSTRAC about more than 19.5 million international funds transfers amounting to above $11 billion. Also, it refrained from give information relating to the origin of some of these international funds transfers and about the source of funds to other banks in the transfer chain.
Further, the regulator noted that the Australian lender did not keep proper records relating to the origin of some of these transfers. Westpac also failed to assess and monitor the risks associated with moving money into and out of Australia through its correspondent banking relationships.
Lastly, the bank did not conduct appropriate customer due diligence in relation to suspicious transactions associated with possible child exploitation.
Notably, Westpac self-reported about 76,000 additional failures after the civil penalty action was launched in 2019. These were related to reporting of international transfers, reasonably monitor customers for transactions along with failures to assess money laundering and terrorism financing risks.
AUSTRAC’s CEO Nicole Rose said “Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac’s non-compliance.”
Shares of Westpac have lost 19.7% over the past six months compared with the industry’s 0.3% decline.
Currently, Westpac carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recently, in an investigation by BuzzFeed and the International Consortium of Investigative Journalists, it was found that several global banks, including JPMorgan (JPM - Free Report) , Deutsche Bank (DB - Free Report) , BNY Mellon (BK - Free Report) , allegedly kept “moving staggering sums of illicit cash for shadowy characters and criminal networks” despite warnings from the U.S. officials.
The report actually revealed that despite asking banks to file SARs in case of detection of money laundering, no proper action has been taken to stop these illegal activities, both by the banks and regulators.
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