Westpac is set to pay a record $1.3 billion penalty to settle a massive lawsuit filed against it by Australia’s financial crime watchdog in November last year after contravening anti-money laundering laws millions of times.
The proposed penalty, which requires court approval, is well above the $900 million that Westpac had previously set aside.
AUSTRAC’s lawsuit, filed late last year, alleged a massive failure by Westpac to implement automated transaction monitoring systems for money coming in and out of Australia.
This, it alleged, resulted in 23 million contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
Westpac said today it would file with the federal court “a statement of agreed facts and admissions”.
Group CEO Peter King apologised “for the bank’s failings”.
“We are committed to fixing the issues to ensure that these mistakes do not happen again,” King said.
“This has been my number one priority.
“We have also closed down relevant products and reported all relevant historical transactions.
“This agreement is an important step in the court process.
“It provides more certainty to all our stakeholders as we continue to implement the measures in our response plan, and complete the implementation of recommendations from the reviews that have been conducted.”
Westpac said the penalty it and AUSTRAC would recommend to the court “reflects the outcome of ongoing review and dialogue” between the two parties.
An advisory panel report into the Westpac board’s oversight of financial crime obligations that was released in June put fresh scrutiny on Westpac’s technology stack, questioning whether the bank’s IT platforms were “best practice”.
The transaction monitoring failures that led to the lawsuit have been attributed to poorly-implemented middleware between batch systems and monitoring software. Implementation works beset by technical difficulties and staff cuts, a prior review found.
Westpac lost both its CEO and chairman as a result of the incident.