Westpac & AUSTRAC Agree on $1.3B Proposed Penalty for AML Breaches
- If approved by the Federal Court of Australia, it will be the largest civil penalty in Australian history.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) announced this Thursday that it has come to an agreement with Westpac to implement a $1.3 billion proposed penalty over the Australian bank's breaches of the Anti- Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders. Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders. Read this Term and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
In its statement today, the government financial intelligence agency said that it has agreed with Westpac that the $1.3 billion fine reflects the seriousness and magnitude of the compliance failings by the bank.
AUSTRAC Proposed Fine Could Make History
With the proposed penalty now agreed to by the two parties, the Federal Court of Australia will now consider the proposed settlement and penalty. If deemed appropriate by the Court, it will mark the largest-ever civil penalty in Australian history.
As part of the settlement, Westpac has admitted to contravening the AML/CTF Act on more than 23 million occasions, which ranged from failing to report international funds instructions, inadequate record-keeping and customer due diligence, and other breaches.
Specifically, the Australian bank has admitted that it failed to properly report more than 19.5 million International Funds Transfer Instructions (IFTIs), totalling more than $11 billion, to AUSTRAC.
Additionally, Westpac did not pass on information relating to the origin of some of these international funds transfers, did not keep records on the origin of some of these transfers, and did not appropriately assess and monitor the risks with the movement of the funds in and out of Australia.
Westpac Admits Failing to Carry Out Appropriate Due Diligence
Furthermore, the bank has admitted to failing to carry out appropriate customer due diligence in relation to suspicious transactions which have been associated with possible child exploitation.
The settlement sends a strong message to the finance industry, and, according to AUSTRAC’s Chief Executive Officer, Nicole Rose PSM, the regulator will continue to take action to protect Australia’s financial system from being exploited by criminals.
“Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac’s non-compliance,” Rose said in the statement.
“Westpac’s failure to implement effective transaction monitoring programs, and its failure to submit IFTI reports to AUSTRAC and apply enhanced customer due diligence in relation to suspicious transactions, meant AUSTRAC and law enforcement were missing critical intelligence to support police investigations.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) announced this Thursday that it has come to an agreement with Westpac to implement a $1.3 billion proposed penalty over the Australian bank's breaches of the Anti- Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders. Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders. Read this Term and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
In its statement today, the government financial intelligence agency said that it has agreed with Westpac that the $1.3 billion fine reflects the seriousness and magnitude of the compliance failings by the bank.
AUSTRAC Proposed Fine Could Make History
With the proposed penalty now agreed to by the two parties, the Federal Court of Australia will now consider the proposed settlement and penalty. If deemed appropriate by the Court, it will mark the largest-ever civil penalty in Australian history.
As part of the settlement, Westpac has admitted to contravening the AML/CTF Act on more than 23 million occasions, which ranged from failing to report international funds instructions, inadequate record-keeping and customer due diligence, and other breaches.
Specifically, the Australian bank has admitted that it failed to properly report more than 19.5 million International Funds Transfer Instructions (IFTIs), totalling more than $11 billion, to AUSTRAC.
Additionally, Westpac did not pass on information relating to the origin of some of these international funds transfers, did not keep records on the origin of some of these transfers, and did not appropriately assess and monitor the risks with the movement of the funds in and out of Australia.
Westpac Admits Failing to Carry Out Appropriate Due Diligence
Furthermore, the bank has admitted to failing to carry out appropriate customer due diligence in relation to suspicious transactions which have been associated with possible child exploitation.
The settlement sends a strong message to the finance industry, and, according to AUSTRAC’s Chief Executive Officer, Nicole Rose PSM, the regulator will continue to take action to protect Australia’s financial system from being exploited by criminals.
“Our role is to harden the financial system against serious crime and terrorism financing and this penalty reflects the serious and systemic nature of Westpac’s non-compliance,” Rose said in the statement.
“Westpac’s failure to implement effective transaction monitoring programs, and its failure to submit IFTI reports to AUSTRAC and apply enhanced customer due diligence in relation to suspicious transactions, meant AUSTRAC and law enforcement were missing critical intelligence to support police investigations.