The gravity of Westpac’s non-compliance with Australian anti-money laundering laws appears to have intensified after the bank conceded it had miscalculated the number of transactions it should have reported to the financial crime regulator.
In a disclosure that amplifies the bank’s legal exposure in the civil case brought against it by AUSTRAC, Westpac revealed that the number of threshold transaction reports (TTRs) it failed to report may have been double its previous estimate.
Banks report TTRs to AUSTRAC when customers transfer more than A$10,000 to another person’s account.
In most recent half year accounts Westpac said it failed to report 60,000 to 90000 TTRs to the financial crime regulator, but that estimate has been ratcheted up to around 175,000 transactions.
“Following further investigations and in response to a notice from AUSTRAC, Westpac has provided AUSTRAC with updated information relating to these TTR issues, including approximately 175,000 transactions that were not reported to AUSTRAC and approximately 365,000 TTRs that were reported to AUSTRAC but may have contained incomplete or inaccurate information,” the bank told the ASX.
The bank indicated that some of the new cases of non-reporting might not constitute breaches of anti-money laundering laws.
“A significant proportion of the potential reporting issues relate to a range of complex scenarios where the legislation requires Westpac to exercise judgement on how multiple transactions may be aggregated and whether a threshold transaction has actually occurred,” the bank said.
“Accordingly, not all of the above numbers may be breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
“Westpac continues to engage with AUSTRAC in relation to these TTR issues, and notes that the numbers above may change.”
AUSTRAC launched legal action against the bank in the Federal Court last November, alleging that the company committed more than 23 million breaches of anti-money laundering laws.
The regulator alleges that Westpac failed to conduct due diligence on customers sending money to people in the Philippines and South East Asia with links to child exploitation activities.
While the bank has admitted to millions of breaches, it has rejected AUSTRAC’s claim that it failed to maintain a compliant anti-money laundering monitoring system across its business operations.
The new disclosure on TTR reporting breaches might indicate that the bank’s monitoring and reporting systems continued to operate ineffectively for up to seven months after AUSTRAC lodged its civil claim.