Westpac has agreed to pay the largest fine in Australian corporate history, settling a case brought against it for breaching international money transfer laws which could have funded terrorism or child exploitation.
The latest fine eclipses the record $700 million penalty against fellow major bank Commonwealth in 2018.
The $1.3 billion was agreed to between Westpac and the Australian Transaction Reports and Analysis Centre (AUSTRAC), an intelligence agency set up to monitor the countrys finance industry so it plays no part in money laundering, terrorism financing, tax evasion, or organised crime.
AUSTRAC monitors over 15,000 individuals, businesses, and organisations in Australia.
“This is a very significant penalty, and it reflects the significance of the offences here,” Federal Treasurer Josh Frydenberg told ABC Radio Melbourne on Sept. 24.
“This should not have happened,” he added.
Westpac, one of Australias big four banking institutions, was deemed to have breached the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
The Act requires banks to report international funds transfers which are deemed suspicious.
Westpac admitted to breaking fund transfer laws 23 million times and failed to report 19.5 million transfers (worth over $11 billion) to AUSTRAC.
AUSTRAC also found the bank failed to carry out proper due diligence on customers, particularly suspicious transactions connected with child exploitation.
AUSTRAC first brought the case against Westpac in late 2019, which triggered the resignations of former Chairman Lindsay Maxsted, and then-CEO Brian Hartzer, a U.S.-Australian dual citizen.
The fine requires final approval from the Federal Court of Australia.
Current Westpac CEO Peter King was apologetic for the banks failings saying, “We are committed to fixing the issues to ensure that these mistakes do not happen again.”
“We have also closed down relevant products and reported all relevant historical transactions,” he said in a statement on Sept. 24.
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