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Tech & Science Westpac hit with $500m capital charge over AUSTRAC scandal

01:25  17 december  2019
01:25  17 december  2019 Source:   smh.com.au

Westpac to admit money laundering breaches

  Westpac to admit money laundering breaches Westpac will admit to millions of breaches of anti-money laundering and counter-terrorism financing laws, the Federal Court has heard.Lawyer for the bank said in the Federal Court on Monday it was expected to admit to all or most of the 23 million breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act it has been accused of by the Australian Transaction Reports and Analysis Centre.

Apra also added $ 500 m capital requirement bringing total capital penalty imposed on the bank to bn. “Given the nature of the matters raised by Austrac , the number of alleged breaches and the period of time over which they occurred, this will necessarily be an extensive and potentially lengthy

Westpac board could be disqualified over alleged breaches, Josh Frydenberg says. “Apra confirms it is looking into governance issues at Westpac following the Austrac action,” a In July, Apra made Westpac add an extra $ 500 m to its prudential capital buffer for identified weaknesses in Westpac ’s

a person standing in front of a building: Westpac must set aside $500 million more  in capital because of its money laundering scandal.© Getty Westpac must set aside $500 million more in capital because of its money laundering scandal.

Westpac must hold an extra $500 million in capital as a result of its money laundering scandal, as the banking regulator launches a sweeping investigation that could lead to fines or disqualification of senior managers.

The Australian Prudential Regulation Authority (APRA) on Tuesday announced the extra capital charge, which will weigh on Westpac's returns, saying it reflected the bank's "heightened operational risk profile."

APRA also said it would probe whether the bank or its top brass had breached the Banking Act or the Banking Executive Accountability Regime, known as the BEAR.

Australia, New Zealand dollars drift off, data continue to diverge

  Australia, New Zealand dollars drift off, data continue to diverge Australia, New Zealand dollars drift off, data continue to divergeThe Aussie was stuck at $0.6812, having slipped further away from its recent peak at $0.6862. Immediate support lies around $0.6800. The kiwi dollar drifted off to $0.6527 and really needs to break last week's four-month top of $0.6576 to regain momentum.

Westpac is in the process of raising $ 500 million from retail shareholders who have virtually no idea of the extent of the financial damage that will be inflicted on the bank by Cyclone AUSTRAC . It’s rare to see investors trading in such an uninformed market. So large is the information vacuum that

Westpac is Australia's first bank with a range of innovative financial packages to support your personal, business or corporate banking needs. Our Response Plan to AUSTRAC .

This probe means the bank could face fines, and senior management could be disqualified, if the regulator finds that senior people in the bank have breached their obligations.

The action from APRA is the latest fallout from a money laundering scandal at Westpac, which was last month accused of breaking anti-money laundering and counter-terrorism financing laws 23 million times by the financial intelligence agency, AUSTRAC.

The bombshell lawsuit, which triggered the dramatic resignations of former chief executive Brian Hartzer and chairman Lindsay Maxsted, also alleged the bank failed to properly monitor thousands of payments that may have facilitated child exploitation.

"Given the magnitude and nature of the issues alleged by AUSTRAC, APRA is aiming to ensure that fundamental deficiencies in Westpac’s risk management framework are identified and addressed and that Westpac and those responsible are held accountable as appropriate," APRA said.

Westpac's Maxsted vows to improve culture amid 'shock, disappointment and concern'

  Westpac's Maxsted vows to improve culture amid 'shock, disappointment and concern' Westpac chairman Lindsay Maxsted has apologised to shareholders over the money laundering scandal that has engulfed the bank.Addressing investors at the bank's annual general meeting in Sydney, Mr Maxsted said that since the laundering scandal was revealed last month, shareholders had expressed their "shock, disappointment and concern" to him.

The alleged breaches involved over 53,700 transactions over ,000 through a type of ATM that allowed anonymous cash In November 2019, AUSTRAC took action against Westpac alleging "systemic non-compliance" with AML/CTF 23 Police agencies. Australian Capital Territory Policing.

AUSTRAC ’s legal action against Westpac last week kicked things off and it looks like APRA could wade in this week. Mr Frydenberg said APRA may look at APRA has the power to fine banks and can apply to the court for fines of up to $ 500 million. The Westpac share price could be under pressure

The capital slug means Westpac is now holding additional capital of $1 billion for operational risk, given that Westpac, ANZ Bank, and National Australia Bank had previously been forced to hold an extra $500 million because of cultural and governance problems.

Commonwealth Bank, which last year faced an inquiry from APRA, is already holding $1 billion extra capital because of its recent history of scandals.

APRA said its review into Westpac would focus on the bank's risk governance.

APRA deputy chairman John Lonsdale said AUSTRAC had made "serious allegations that question the prudential standing of Australia’s second largest bank."

“While Westpac is financially sound, there are potentially substantial gaps in risk governance that need to be closed," Mr Lonsdale said.

“Given the nature of the matters raised by AUSTRAC, the number of alleged breaches and the period of time over which they occurred, this will necessarily be an extensive and potentially lengthy investigation.”

Treasurer Josh Frydenberg last month said APRA would be conducting an inquiry into the embattled bank, but its announcement on Tuesday provided detailed terms of reference and confirmed it would consider acting under the BEAR.

APRA's terms of referenece for its investigation said it would look at issues including the bank's governance, control and risk management framework; its accountability and remuneration arrangements; and whether it had complied with its legal obligations to APRA.

More to come

'This is the new environment we're in': Nightmare week for banks sparks dividend fears .
The scandals gripping the big banks show no sign of letting up, and investors fear dividends could be the casualty.His counterparts at Westpac went through the same ritual in the very same venue, the International Convention Centre, just six days prior. And for that bank – reeling from one of the worst corporate crises in Australian history – it wasn't pretty.

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