SYDNEY (Reuters) - Westpac Banking Corp WBC.AX admitted to millions of breaches of anti-money laundering and counter-terrorism laws in a filing in Australia's Federal Court on Friday, but denied accusations it enabled illegal payments between known child sex offenders.
In its defence filing, Australia’s second largest bank admitted it had failed to correctly report various international transfers of funds as required by law, adding that it accepted the gravity of the issues raised by the regulator AUSTRAC.
The Sydney-based lender has already set aside A$900 million ($580 million) for an expected fine from the case.
“Westpac and AUSTRAC continue to engage constructively and are discussing a Statement of Agreed Facts and Admissions,” the lender said in the separate statement released to the media.
The statement said Westpac had admitted to record keeping failures and inadequate customer due diligence, as well as breaches of certain correspondent banking obligations.
Last November, the regulator AUSTRAC filed a civil lawsuit accusing the bank of presiding over 23 million payments that violated anti-money laundering protocols, including payments by Australians to child pornography purveyors in the Philippines.
In the 57-page document filed with the court, Westpac denied AUSTRAC’S accusation that it failed to identify activity indicative of child exploitation risks.
It said its monitoring programme complied with the law and noted that it had implemented detection systems to monitor “heightened child exploitation risks associated with low value payments” to the Philippines through its low-value money transfer product LitePay.
Westpac also admits that between 2013 to 2018, it failed to report to AUSTRAC 19,428,039 international transfer reports within 10 business days, as required by law.
It denies however, that it failed to carry out transaction risk assessments but admits those were not sufficient to identify reasonable risks including that banking services it provided through banks in other countries might “inadvertently or otherwise” involve or facilitate money laundering or financing of terrorism.
It also admitted its risk rating systems ignored when its counterparty banks operated in jurisdictions “subject to trade or financial sanctions”, the document shows.
Reporting by Paulina Duran in Sydney, and Rashmi Ashok in Bengaluru; Editing by Shri Navaratnam, Edwina Gibbs and Michael Perry
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