Westpac scandal: Bombshell allegations the bank is linked to child exploitation in the Philippines

Westpac is facing bombshell allegations linked to child exploitation in the Philippines as money-laundering watchdog AUSTRAC comes after the bank over 23 million alleged breaches of the law.    

AUSTRAC chief executive Nicole Rose said the bank failed to carry out due diligence on high-risk transactions to the Philippines and Southeast Asia that carried potential child exploitation risks. 

The dirty money watchdog alleges nearly 3,000 transactions indicative of child exploitation payments – totalling about $480,000 – were made by 12 Westpac customers.   

Westpac’s chief executive Brian Hartzer has refused to resign in the face of accusations from AUSTRAC that the bank persistently breached money-laundering and counter-terror laws

The bank allegedly failed to stop one of their customers from making frequent low-value payments to the Philippines, despite learning they were previously jailed for offences related to child exploitation.

The activity had been flagged as suspicious, but the customer was allegedly still able to send about $2,600 through other accounts between about June 10 and August 19 this year. 

Ms Rose alleged Westpac failed to keep required records and pass on information about the origin of international funds transfers.

‘AUSTRAC alleges that Westpac’s oversight of its corresponding banking services was deficient, and that its oversight of its anti-money laundering and counter-terrorism financing program was also deficient,’ she said.

AUSTRAC has taken the bank to court over allegations it contravened the laws on more than 23 million occasions, which could cost $1billion in penalties.

The transactions amounted to more than $11billion over nearly five years.

Speaking to media on Wednesday afternoon, Westpac CEO Brian Hartzer said he wouldn’t resign over the allegations and will personally lead the bank’s response to the crisis. 

‘I’m committed to seeing that through and making sure we fix it properly and it will never happen again. We recognise that this is a significant matter for the bank and accept there will be consequences for Westpac,’ he said, The Australian reported. 

AUSTRAC has taken Westpac to court over allegations the bank contravened the laws on more than 23 million occasions (stock image)

AUSTRAC has taken Westpac to court over allegations the bank contravened the laws on more than 23 million occasions (stock image)

He became aware of the issues around customer due diligence a month ago, but only learned about the more detailed matters regarding child exploitation on Tuesday.

‘I was utterly horrified at what I read, and am absolutely determined to get to the bottom of why on earth this was allowed to persist,’ he said.

Mr Hartzer pinned the failures to detect money laundering on an automated process the bank set up in 2010.

‘These issues should never have occurred and should have been identified and rectified sooner,’ he said in a statement.

‘It is disappointing that we have not met our own standards as well as regulatory expectations and requirements.’ 

National Australia Bank last week admitted it faces a huge fine for multiple possible breaches of counter terrorism and anti-money laundering laws.

In a statement Mr Hartzer said, 'These issues should never have occurred and should have been identified and rectified sooner'

In a statement Mr Hartzer said, ‘These issues should never have occurred and should have been identified and rectified sooner’

Commonwealth Bank was fined a record $700million in 2018 for serious breaches of the same laws.

Attorney-General Christian Porter said the CBA fine came after 53,000 breaches, while Westpac was alleged to have made 23 million.

He said it was unclear if they were in the same category or a different level of seriousness.

‘That is a matter of the utmost seriousness. I mean, on its face, it’s completely appalling but we need to know more about it,’ Mr Porter told the National Press Club.

Ms Rose said Westpac’s alleged failures resulted in serious and systemic breaches of anti-money laundering and counter-terrorism financing laws.

‘This resulted in a significant loss of intelligence to AUSTRAC and our national security and law enforcement partners,’ Ms Rose said.

The prime minister said despite the controversies, the banks needed to continue supporting home buyers and small businesses.

‘All of this is not a leave pass to pull up the drawbridge in terms of the credit extension into the Australian economy,’ Mr Morrison said.

Read more at DailyMail.co.uk