Westpac Banking Corporation’s chief executive, Brian Hartzer, is stepping down in the wake of Australia’s anti-money laundering and terrorism financing regulator alleging the bank contravened the law on 23 million occasions.
AUSTRAC six days ago applied to the Federal Court of Australia for civil penalty orders against Westpac in relation to "systemic non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) Act 2006.
Westpac’s chief financial officer, Peter King, will become acting CEO on December 2. However, Hartzer will continue to be paid his fixed remuneration of A$2.686 million for a year.
Chief operating officer, Gary Thursby, will fill King’s role,
Westpac’s chairman, Lindsay Maxsted, will bring forward his retirement to the first half of 2020.
Long-standing director, Ewen Crouch, won’t seek re-election at the upcoming Westpac AGM.
Maxsted, said: “The Board accepts the gravity of the issues raised by AUSTRAC.
“As was appropriate, we sought feedback from all our stakeholders including shareholders and having done so it became clear that Board and management changes were in the best interest of the Bank."
Hartzer said: “As CEO I accept that I am ultimately accountable for everything that happens at the Bank. And it is clear that we have fallen well short of what the community expects of us, and we expect of ourselves.”
Maxsted said: “Peter King has been appointed Acting CEO until a global search process for a new CEO is completed.
"Peter has had a long and distinguished career at Westpac and has been the CFO since 2014. He is the right choice to provide stability and direction to the Bank and its people.
“The Board has asked Peter to focus on two immediate priorities: to implement the Westpac Response Plan and to continue to execute the Group’s broader strategy.
“We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime prevention processes are industry leading.
“We are currently working through our response to the Statement of Claim and will shortly commence the independent review. The Board will continue to provide updates on these issues.
“Brian leaves the Bank with a strong balance sheet, with each of our businesses number one or two in their markets."
Westpac NZ distances itself from Aussie parent
A spokesman for Westpac New Zealand said the bank had reviewed AUSTRAC’s statement of claim against its Aussie parent to make "absolutely certain" its Westpac NZ systems and processes were robust and secure.
"The AUSTRAC proceedings relate to Westpac Banking Corporation and Australian AML/CFT laws. The proceedings do not relate to Westpac New Zealand which is subject to independent oversight by the Reserve Bank of New Zealand under New Zealand AML/CFT laws," the Westpac NZ spokesman said.
"We have a range of controls in place to identify and prevent financial crime.
"We do not offer the Litepay or Australasian Cash Management Direct Entry products in New Zealand.
"The RBNZ supervision in New Zealand includes onsite visits and monitoring. We regularly engage with the RBNZ on these issues and will continue to do so. We are confident we are complying with relevant New Zealand laws and regulation."
The RBNZ has said it's "looking closely" at the case for any relevance for Westpac NZ.
AUSTRAC claims the Westpac Banking Corporation failed to:
1. 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. Westpac has allowed correspondent banks to access its banking environment and the Australian Payments System without conducting appropriate due diligence on those correspondent banks and without appropriate risk assessments and controls on the products and channels offered as part of that relationship.
2. Report over 19.5 million International Funds Transfer Instructions (IFTIs) to AUSTRAC over nearly five years for transfers both into and out of Australia. The late incoming IFTIs received from four correspondent banks alone represent over 72% of all incoming IFTIs received by Westpac in the period November 2013 to September 2018 and amounts to over $11 billion dollars. IFTIs are a key source of information from the financial services sector that provides vital information into AUSTRAC’s financial intelligence to protect Australia’s financial system and the community from harm.
3. Pass on information about the source of funds to other banks in the transfer chain. This conduct deprived the other banks of information they needed to understand the source of funds to manage their own AML/CTF risks.
4. Keep records relating to the origin of some of these international funds transfers.
5. Carry out appropriate customer due diligence on transactions to the Philippines and South East Asia that have known financial indicators relating to potential child exploitation risks. Westpac failed to introduce appropriate detection scenarios to detect known child exploitation typologies, consistent with AUSTRAC guidance and their own risk assessments.
45 Comments
Ironically, the opposite might happen.
In an attempt to show their customers that they 'have listened to them', they might relax their currently tight lending standards to dampen down the controversy.
We'll see....
(What would you do, as the new incoming CEO? Get tougher on lending, and alienate your customer base more, or throw them a bone?)
Your right about that in Godzone--not so much in USA (unless you are a Deep State Mate-ie most Manhattan Bankers), for other erstwhile corporate crooks more pain is usually exerted-eg: "Thomas Joseph Petters is an American businessman and the chairman and CEO of Petters Group Worldwide who was convicted of massive business fraud in 2009 and is now imprisoned at the United States Penitentiary, Leavenworth.[3] Amid mounting criminal investigations, Petters resigned as his company's CEO on September 29, 2008.[4] He was convicted of numerous federal crimes for operating Petters Group Worldwide as a $3.65 billion Ponzi scheme[5] and received a 50-year federal sentence."
" https://en.wikipedia.org/wiki/Tom_Petter
Sentances like that shed better light on why Dotcom is so desperate to stay in NZ.
NZ is a heaven for money laundering so why raise question as everyone is doing their part that has been happening.
Why change anything or how would NZ ecenomy survive - house price in NZ could not be supported without foreign money / money laundering on NZ wages and the most feel rich ecenomy in NZ is housing ecenomy so why jeoparidize it.
Am just saying what our politicians believe in - How could any politicans or experts be blind and not see what was happening specially in last few years.
Have guts bring new leader and political party who will actually work for average Kiwi.
No wonder Trumpism is on rise or soon will have referendum on the name of our country. Should it be New zealand or Chinaland as process has started and cannot be reserved unless get someone like Trump.
Another NZ front for the rich and powerful (and corrupt)
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
That's just mind boggling, how can he be allowed to walk away with A$2.686 million for a year! After what he allowed to happen?! Not after reading this article: The Guardian: Westpac in crisis talks with largest investors amid money-laundering scandal. "Legal action accusing bank of 23m law breaches hits share price and could lead to class actions"
"The case is likely to lead to fines in excess of $1bn. Commonwealth Bank has already agreed to a $700m fine as a result of failures to properly oversee the use of its ATM machines in breach of money-laundering controls. But its case involved just 53,000 breaches, compared with 23m for Westpac.
Westpac now faces further investigations, which could impact directly on the bank’s directors and senior executives".
https://www.theguardian.com/australia-news/2019/nov/25/westpac-in-crisi…
Temptation is always a toughie, but greed is the killer. Both of these 'qualities' have been on show within the Australian banking system for a long time now. One wonders why it took so long to bring them to account. I suppose it must be hard when you have thievery in your DNA.
Was it HSBC who designed their cashier windows to fit the briefcases (filled with money) preferred by Mexican cartels?
Always makes me laugh when people claim Crypto Currencies, aka Bitcoin is used for crime/money laundering. It's a public ledger baby .. not a private bank making 23 million plus questionable transactions LMFAO
To quote Voldemort; "They Never Learn".
They have known what they have been doing for a long term.
Money has been a private business for over a century now, commenced with the creation of the Federal Reserve in 1913. Owned by private individuals, hidden through a Labyrinth of nominee companies and blind trusts.
Banking is nothing more than a private tax system, which bankrupted itself around the GFC period, and has been attempting to inflate its way out of the liabilities it is hiding off balance sheet.
Through short trading, the same crowd has been manipulating bitcoin (with huge volatility); in an attempt to shut down the competition threat. Outlaw these gangsters, and bring money back to its original use as "a medium of exchange only'.
I am in favour of the PM department's sacking of Westpac.
Stop Westpac being banker to New Zealand Government.
Robust procurement process. This process must have a bad character clause. Use it!
https://www.westpac.co.nz/wib/relationship-management/government-bankin…
Following a robust procurement process, the New Zealand Government appointed Westpac in September 2015 to be:
The exclusive provider of Crown Transactional Banking services to core Crown Agencies
A panel provider for all panelled services, which include:
a. Foreign Exchange Services
b. Payment Services
c. Card Services
The All-of-Government Banking Services solution process has been a great catalyst to determine how Westpac and Government together can continue to create value for New Zealand over the coming 8 years. Working towards 2023, Government can continue to expect the reliability of the bank that’s banked the New Zealand Government for 26 years. At Westpac, we also have a whole new suite of services, pricing and improvements, freshly designed for the New Zealand Government of 2015
Business colleague of mine was CEO across 4 countries for a global data company in Asia. Been with the company and in the role for almost 20 years. Sacked on the spot and removed from premises after it was discovered a pair of shoes had been bought for a client.
The banking industry in the West is rotten and broken.
He might walk away with a salary but he would be stupid to spend it.
Under the BEAR regime, which almost certainly is in the frame here, I would expect APRA to push for at least civil penalties if not criminal. Yes, given the significance of the issue and the timing of it (and the Royal Banking Commission telling regulators to get tougher) there is a real possibility that Hartzer faces jail time.
Follow the munny...I always say....and this to me is totally, obvious.
Baubles, bangles and beads. Rolls and Rolls of em. Now where did they spring from....DUH.
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12288198
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.