APRA took action against Westpac after voicing concerns over the bank’s progress on remediating its AUSTRAC weaknesses, including an “immature and reactive risk culture, unclear accountabilities, capability shortfalls, and inadequate oversight”.
“As one of the country’s largest and most important financial institutions, Westpac should be a leader in risk management,” said APRA deputy chair John Lonsdale.
“Although the bank has made progress in some areas over the past year, it is not good enough. We continue to observe new prudential issues arising while long-standing weaknesses persist, and we believe Westpac’s governance, culture and accountability frameworks and practices are still in need of a substantial uplift.”
The court-enforceable undertaking will require Westpac to develop an integrated plan incorporating all major risk governance remediation programs, covering both financial and non-financial risks; obtain independent assurance over the implementation of the plan with direct reporting to APRA; and assign accountabilities for delivery of the plan to executives and board members.
“Entering into a CEU is a serious step that indicates the severity of the situation. The integrated plan required by the CEU must be designed to deliver the sustainable risk governance step-change that APRA requires,” Mr Lonsdale said.
