Westpac’s rating unaffected by money laundering proceedings
The credit rating agency, Fitch Ratings, has said Westpac’s credit rating will not be immediately affected by credit negative proceedings brought to the firm by the Australian Transaction Reports and Analysis Centre (AUSTRAC) for systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act, as it had been already factored into the bank’s negative outlook.
The agency said it believed the allegations reflected a wider range of weaknesses in internal controls and reporting systems which were already taken into account.
“Fitch believes the alleged failures reflect broader weaknesses in Westpac's current systems and controls, which the authorities have claimed is not unique among Australia's four major banks – whose long-term internal dispute resolutions are all on negative outlook. Westpac is addressing the weaknesses,” the company said.
“The AUSTRAC proceedings are likely to increase costs for Westpac and take up management's time in the short-term, but we believe the immediate impact for Westpac will be manageable.”
On 20 November 2019, AUSTRAC applied to the Federal Court of Australia for civil penalty orders against Westpac, with allegations indicating that Westpac's oversight of banking services provided through its correspondent banking relations was deficient in allowing correspondent banks to access the Australian Payment System without conducting appropriate due diligence.
Also, it said the bank failed to report over 19.5 million International Funds Transfer Instructions (IFTIs) to AUSTRAC, of which the potential costs from fines or settlement have yet to be determined.
“Likewise, we expect any fine or settlement to be manageable if it is one-off in nature,” the agency said.
“By way of comparison, Commonwealth Bank of Australia (AA-/Negative/aa-) agreed to a $700 million after-tax settlement with AUSTRAC in 2018 following proceedings related to the anti-money laundering and counter-terrorism financing law.”
Recommended for you
Over half of wealth management clients in Asia-Pacific say they are looking for more advice in investment and financial planning services, according to EY, and may switch or add new providers to achieve this.
As artificial intelligence continues to reshape how the advice industry operates, Adviser Ratings unpacks which areas advisers are using the technology to improve the client experience.
Insignia Financial has appointed the former APAC head of a global asset manager to its board.
Financial advisers have been warned against advising clients to withdraw superannuation for medical or dental treatments as a new report highlights the long-term effect on balances at retirement.