Westpac share price falls 2% as AUSTRAC pursues civil penalty orders

The market bid Westpac’s share price lower today, following AUSTRAC's claims that the bank had breached Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act on a number of occasions.

Westpac share price drops on AUSTRAC news

The banks really can’t catch a break.

AUSTRAC today announced that it would pursue civil penalty orders against Westpac (ASX: WBC) due to non-compliance with Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act.

All up, AUSTRAC alleges that Westpac breached this Act on 23 million occasions.

While the full consequences of the watchdog’s pursuit remains impossible to quantify at this point, investors still bid Westpac’s share price down more than 2% during the morning session.

At the time of writing the Westpac share price traded around the $25.98 mark.

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Details of the civil action

The anti-money-laundering and terrorism financing watchdog articulated five key areas where Westpac (ASX: WBC) exhibited non-compliance.

Core amongst them is the claim that Westpac failed to:

‘Appropriately assess and monitor the ongoing money laundering and terrorism financing risks associated with the movement of money into and out of Australia through correspondent banking relationships.’

According to the watchdog and over a five year period, the bank also did not appropriately report over 19.5 million International Funds Transfer Instructions (IFTIs) to the regulator, as well as ‘pass on information about the source of funds to other banks in the transfer chain.’

Adequate records were also not maintained regarding the origins of some of these transfers (IFTIs).

Finally, Westpac also allegedly failed to undertake appropriate due diligence on transactions to the Philippines and South East Asia. Such transactions may pose child exploitation risks, noted AUSTRAC.

The bank’s response

Westpac this morning issued a short response to AUSTAC’s media release, with the bank positing that it had:

'Previously disclosed (including in its Full Year 2019 reporting) that it had self-reported a failure to report a large number of international funds transfer instructions (IFTIs) to AUSTRAC.'

Indeed, AUSTRAC did corroborate such a view, noting that Westpac did indeed disclose:

‘Issues with its IFTI reporting, has cooperated with AUSTRAC’s investigation and has commenced the process of uplifting its AML/CTF controls.’

The bank intends to release a further update to the market once it has had a chance to review AUSTRAC’s statement of claim with more depth.

The Westpac (ASX: WBC) share price is down more than 13% since September.

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