After more than a year of investigation and the assistance of the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) has closed its investigation into Westpac for possible breaches of the Banking Act including the Bank Executive Accountability Regime.
The regulator announced today that it had concluded the exercise and had decided to close its investigation while noting that Westpac remained subject to a court enforceable undertaken to implement an integrated risk governance remediation plan.
APRA said it had started its investigation in December 2019 with respect to concerns arising from allegations by AUSTRAC that Westpac had breached anti-money laundering and counter-terrorism laws. APRA’s investigation also examined the bank’s actions to rectify and remediate the issues after they were identified.
In June last year, APRA said it delegated certain enforcement powers to the Australian Securities and Investments Commission (ASIC), which was conducting its own investigation into whether the conduct giving rise to the allegations amounted to contraventions of the Corporations Act 2001 (Corporations Act). The delegation was done to avoid both agencies separately investigating and potentially litigating related matters.
“Having carefully considered the results of ASIC’s investigation, APRA has determined to close its investigation. Westpac remains subject to a court enforceable undertaking (CEU) to implement an integrated risk governance remediation plan to uplift risk governance across its business with ongoing independent review over its progress. The $1 billion operational risk capital add-on, which reflects the bank’s heightened operational risk profile, will also remain in place until Westpac completes its remediation under the CEU to APRA’s satisfaction,” the statement said.
APRA deputy chair, John Lonsdale said that although the investigation had not found evidence of breaches of the Banking Act or the BEAR, APRA remains determined to ensure Westpac rectifies its risk governance weaknesses effectively and sustainably.
“Under the enforceable undertaking, Westpac has clearly defined Executive and Board accountabilities for the implementation of its integrated risk governance remediation plan. APRA will be holding Westpac to account for the delivery of the required improvements,” Lonsdale said.