The board's decision to stand behind Mr Hartzer comes amid intense financial market speculation the CEO may be pushed to leave the bank,and escalating political pressure for"accountability,"including from Prime Minister Scott Morrison.
Mr Maxsted said the bank would establish an independent review aimed at ensuring there was accountability for the scandal;it would ramp up action to improve its systems for fighting financial crime;and it was talking to community groups about further steps to combat child exploitation.
“The notion that any child has been hurt as a result of any failings by Westpac is deeply distressing and we are truly sorry. The board unreservedly apologises,"Mr Maxsted said in a statement.
“Our board,CEO and management team are fully committed to fixing these issues and we are taking all steps necessary to urgently close any remaining gaps and fix our policies and procedures so that this can never happen again."
The financial intelligence agency,AUSTRAC,on Wednesday alleged Westpac had breached anti-money laundering laws 23 million times,mainly because of failures to report incoming payments from overseas.
It also said 12 customers,one with a prior conviction for child exploitation offences,had made suspicious payments that that were indicative of the patterns employed by people suspected to be involved in child exploitation.
AUSTRAC has since referred the details to police,and Mr Maxsted said the bank had"taken action"on all of the customers identified by the regulator.