Westpac chairman Lindsay Maxsted has addressed AUSTRAC’s accusation the bank violated anti-money laundering and terrorism regulation on over 23 million occasions.
“The past week’s events have been deeply distressing,” said Maxsted.
“The issue raised by AUSTRAC that weaknesses in our systems failed to detect criminal actions by customers is incredibly serious and unacceptable. This is not the company we aspire to be and I, again, apologise unreservedly.”
“We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime processes are industry-leading.”
Westpac has released a ‘Response Plan’ which covers three areas:
“When we introduced our LitePay product in 2016, transaction monitoring was put in place to identify suspicious transactions. However, more advanced monitoring, including updated “typologies” from AUSTRAC regarding child exploitation, were not put in place for LitePay payments to the Philippines until June 2018,” explained Maxsted.
“We accept this should have occurred earlier and was not handled appropriately.
“Where Westpac flags transactions that suggest potential child exploitation in high risk locations, these transactions are now prioritised for action and reported to AUSTRAC within 24 hours. This is faster than regulatory standards require.”
Westpac is also providing $18m over the next three years to International Justice Mission, a global not for profit that protects vulnerable people from violence, to assist their critical work in Southeast Asia in relation to Online Sexual Exploitation of Children (OSEC).
Further, Westpac will assemble an expert advisory roundtable and provide up to $10m per year for three years on the subsequent recommended actions to support the prevention of OSEC, as well as match the Australian government's funding for its SaferKidsPH partnership with Save the Children, UNICEF and The Asia Foundation, investing $6m over six years.
In his response, Maxsted highlighted that over the past two years, Westpac has taken a number of steps to substantially improve its monitoring of financial crime and other serious crime, including consolidating different financial crime systems into a single, group-wide technology system, doubling the resourcing dedicated to financial crime to around 750 people and developing a ‘Financial Crime Strategic Plan’, which was shared with AUSTRAC.
Westpac also made changes to the leadership of its risk and financial crime areas, including a number of external appointments.
“However, the allegations indicated that there are still unacceptable shortcomings in this area and the board understands the need for action and accountability,” Maxsted said.
“We accept that we have fallen short of both our own and regulators’ standards and are determined to get all the facts.
“In the interim, all or part of the 2019 short term variable rewards for the full executive team and several general managers will be delayed, subject to the assessment of accountability.
“We recognise the seriousness of these events and that is why we will appoint an external expert to provide independent oversight of the process. We will make the recommendations public.”
According to Maxsted, Westpac is committed to implementing its initial response plan as a matter of urgency and will continue to work with AUSTRAC throughout the process.
“One of our key roles is to help AUSTRAC and government to fight financial crime and we need to have systems and controls in place to prevent our services being exploited,” Maxstead added.
“We are currently working through our response to the Statement of Claim and are commencing the independent review. The board will continue to provide updates on these issues, including the findings relating to accountability.”
