When AUSTRAC made its statement of claim last year, the smallest number of allegations revolved around 12 customers whose account activity was consistent with child exploitation risks – repeated patterns of frequent low-value transactions to countries like the Philippines. At least one of those customers had been charged with child sex offences.
Now the regulator is seeking information on 272 more customers – more than 20 times the number that ultimately led to the downfall of CEO Brian Hartzer and the early retirement of chairman Lindsay Maxsted – on the basis of suspicious matter reports Westpac filed in relation to potential child exploitation issues.
“Westpac has now been informed by AUSTRAC that it is further investigating these matters and has notified Westpac it may amend its statement of claim to include allegations arising from these investigations,” the bank said in a statement.
The new information raises serious questions about the size of the penalty that Westpac could be forced to pay. While the vast majority of the bank’s breaches of AML/CTF legislation stemmed from misreporting of millions of international funds transfer instructions (IFTIs), any new revelations about customers in line with last year’s bombshell could potentially lead to an increased penalty and further reputational damage at a time when Westpac can’t afford either.
AUSTRAC has also sought more information on issues stemming from Westpac’s threshold transaction reporting obligations.
The update comes in the middle of a Westpac victory lap after an independent review vindicated its board of wrongdoing.
“The failings – such as [non-reported] IFTIs or inadequate due diligence on correspondent banks and particular customers – occurred deep in the organisation and it is not reasonable to expect that a board should find these out,” the review reads. “The board relies on information flows from management and it was the content of those flows that was poor.
“Information was (unintentionally) misleading and sometimes omitted.”
A Westpac spokesperson declined to comment on the matter. There is a further case management hearing scheduled for 17 June 2020.
