Westpac announces record-breaking $1.3b fine
Westpac has announced it will pay a $1.3 billion fine, the largest in Australian corporate history, for breaching anti-money laundering laws and for failing to stop child exploitation payments.
Chief executive Peter King apologised for the bank's failings as the settlement with the financial crimes regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), was announced. The Age and Sydney Morning Herald first revealed the penalty was close to being finalised in a board member conference call late on Wednesday evening.
Westpac has announced it will pay a $1.3 billion fine, the largest in Australian corporate history.Credit:Wayne Taylor
"We are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority. We have also closed down relevant products and reported all relevant historical transactions," Mr King said.
The penalty surpasses Commonwealth Bank's $700 million settlement, also with AUSTRAC, in 2018. CBA was fined for its uncapped cash-deposit ATMs that enabled arms and drugs dealers to launder money. That fine dwarfed the previous record, of $45 million paid by Tabcorp.
Westpac stands accused of breaching anti-money laundering laws 23 million times by failing to properly vet thousands of international transactions, including customers who paid for child exploitation and live child sex shows in the Philippines and other parts of South East Asia.
"We are committed to fixing the issues to ensure that these mistakes do not happen again. This has been my number one priority.": Westpac CEO Peter King .Credit:Alex Ellinghausen
The bombshell statement of claim was filed by AUSTRAC in the Federal Court last November and threw the lender into turmoil. Mounting investor calls for accountability triggered the departure of chief Brian Hartzer and chair Lindsay Maxsted and led to three shareholder class actions.
AUSTRAC had flagged it might amend its statement of claim after the bank reported 272 additional customers who made suspicious payments. The deadline for AUSTRAC to file its revised statement of claim is Friday, putting further pressure on the parties to settle.
As part of the agreement, Westpac admitted to the additional contraventions which will be set out an in agreed statement of facts.
Mr King had made it public he intended to settle and told investors on Thursday morning the penalty agreement was an "important step in the court process".
Westpac had set aside $900 million for the fine in April.
More to come
Business Briefing
Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald's here and The Age's here.
Charlotte is a reporter for The Age.