Austrac said the breaches included a failure to "carry out appropriate customer due diligence on transactions to the Philippines and south-east Asia that have known financial indicators relating to potential child exploitation risks".Credit:Wayne Taylor
The financial intelligence agency AUSTRAC on Wednesday launched legal action against the bank alleging"systemic non-compliance"with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act.
Breaches of the AML/CTF attract hefty penalties,with the Commonwealth Bank previously copping a $700 million fine,the biggest in Australian corporate history,for a mass breach of the Act. Westpac is accused of a far greater number of breaches than CBA.
"Westpac contravened the Act on over 23 million occasions. These contraventions are the result of systemic failures in its control environment,indifference by senior management and inadequate oversight by the board,” AUSTRAC said in a statement of claim filed with the Federal Court.
These breaches covered $11 billion of transactions and allegedly included not properly monitoring or not having proper systems in place to detect money laundering,counter-terrorism financing and child exploitation. Westpac said the majority of the transactions were pension payments from foreign governments to people living in Australia.
AUSTRAC alleges that Westpac's systems were used by 12 individuals to conduct almost 3000 transactions that were indicative of the patterns employed by people suspected to be involved in child exploitation. Included in this cohort was a customer with a prior conviction for child exploitation offences. One of the 12 Westpac customers allegedly made transfers totalling $132,000 including to a person in the Philippines who"was later arrested in November 2015 for child trafficking and child exploitation involving live streaming of child sex shows and offering children for sex".
Westpac still has not implemented appropriate automated detection scenarios to monitor for the known child exploitation risks through other channels. As a result,Westpac has failed to detect activity on its customers’ accounts that is indicative of child exploitation.
AUSTRAC
Other customers allegedly transferred large sums in manners which were allegedly indicative of child exploitation - including $75,000 for one customer,$62,000 for another.
All up,AUSTRAC alleges 2944 transactions totalling $480,000 that were indicative of child exploitation payments made by the 12 Westpac customers.