Australian bank Westpac is once again under fire for anti-money laundering (AML) deficiencies regarding transaction reporting.
The Reserve Bank of New Zealand (RBNZ) issued a formal warning to Westpac’s New Zealand branch (Westpac NZ) on Wednesday for failing to report prescribed transactions as required by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). The warning follows an RBNZ order in March that required Westpac NZ to commission two independent reports to address concerns raised about the bank’s liquidity and risk governance processes.
At that time, Westpac hinted at the possibility of demerging from its embattled New Zealand unit.
Wednesday’s action addresses an alleged failure by Westpac NZ to report nearly 8,000 corporate transactions to overseas recipients between July 2018 and February 2019. A flaw in the branch’s transaction reporting system failed to properly flag international wire transfers, according to RBNZ. Such transfers of $1,000 or more are required to be reported under the AML/CFT Act.
“This formal warning reflects the importance of the prescribed transaction reporting regime in building an intelligence picture across New Zealand’s financial system, and reiterates the seriousness with which we view non-compliance with the AML/CFT Act,” said RBNZ Deputy Governor and General Manager for Financial Stability Geoff Bascand in a press release.
Westpac in late 2020 agreed to pay a record AUS$1.3 billion (then-U.S. $912.6 million) to Australia’s financial crime regulator AUSTRAC related to a separate money laundering scandal in which the bank failed to report more than 19.5 million international funds transfer instructions (IFTIs) in violation of AML rules. As a result of these lapses, the bank was accused of facilitating child exploitation in the Philippines and Southeast Asia.
The high-profile case prompted RBNZ to launch a survey of all New Zealand registered banks’ correspondent banking, prescribed transaction reporting, and transaction monitoring processes, which led to Wednesday’s warning for Westpac NZ.