Published by: * Asia Pacific AML
The first step in developing an AML/CFT compliance framework is to identify to what extent your business is exposed to the likelihood of facilitating ML/FT.
Globally, governments recognise certain areas within a business are likely to increase the risk of ML/FT occurring. These areas include the (a) nature, size and complexity of the business, (b) the types of clients or customers that the business deals with, (c) the products or services that the business provides, (d) the methods used to deliver the products or services, (e) the geographies dealt with and (f) the types of relationships that exist with other businesses.
Any one of these areas can expose a business to unwittingly facilitating ML/FT. When two or more of these areas are found to have higher risk, the risk compounds, increasing the probability of ML/FT occurring.
Join this FREE webinar and learn more about each of these areas and the variables that, if present, increases the risk.
This webinar is for AML compliance officers, Risk managers, Directors of risk and Board Members of financial institutions.
Westpac – Hot water situation
Australian anti-money laundering regulator alleges more than 23 million contraventions of the law by Westpac Banking Corporation with the RBNZ ‘looking closely’ for any relevance to Westpac NZ.
The Reserve Bank of New Zealand (RBNZ) says it will be looking closely at an Australian case where Westpac Banking Corporation is alleged to have contravened anti-money laundering laws more than 23 million times for any relevance for Westpac New Zealand.
AUSTRAC, Australia’s anti money-laundering and terrorism financing regulator, has applied to the Federal Court for civil penalty orders against Westpac Banking Corporation, which is Westpac NZ’s parent.
“The civil penalty orders relate to systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). AUSTRAC alleges Westpac contravened the AML/CTF Act on over 23 million occasions. AUSTRAC Chief Executive Officer, Nicole Rose, says that AUSTRAC’s decision to commence civil penalty proceedings was made following a detailed investigation into Westpac’s non-compliance,” AUSTRAC says.
AUSTRAC alleges Westpac Banking Corporation’s oversight of the banking and designated services provided through its correspondent banking relationships was deficient. It says the bank’s oversight of its AML/CTF programme, intended to identify, mitigate and manage the money laundering and terrorism financing risks of its designated services, was also deficient.
“These failures in oversight resulted in serious and systemic non-compliance with the AML/CTF Act,” says AUSTRAC.
Following AUSTRAC’s announcement the RBNZ says it’s working closely with Australian regulatory counterparts. The RBNZ oversees NZ banks for compliance with the NZ AML/CFT Act.
“The Reserve Bank of New Zealand was made aware of AUSTRAC’s actions and is in close contact with counterparts across the Tasman in relation to this issue,” RBNZ Deputy Governor and Head of Financial Stability Geoff Bascand says.
“We have a regular onsite programme with New Zealand banks to ensure compliance with New Zealand’s AML/CFT requirements, and will be looking closely at the Australian findings and if they have relevance for Westpac NZ. The Reserve Bank will not be commenting further at this stage.”
For its part the Westpac Banking Corporation says it has previously disclosed, including in its recent annual financial results, that it had self-reported a failure to report a large number of international funds transfer instructions to AUSTRAC and that AUSTRAC was also investigating a number of other areas relating to Westpac’s processes, procedures and oversight.
“Westpac is currently reviewing AUSTRAC’s statement of claim and will issue a further statement to the ASX once it has been assessed,” Westpac Banking Corporation says.
A spokesman for Westpac NZ, meanwhile, says the AUSTRAC proceedings relate to Westpac Banking Corporation and Australian AML/CTF laws.
“The proceedings do not relate to Westpac New Zealand which is subject to New Zealand AML/CFT laws. We regularly engage with the Reserve Bank of New Zealand about AML/CFT obligations and will continue to do so,” the Westpac NZ spokesman says.
‘Known financial indicators relating to potential child exploitation risks’
Among AUSTRAC’s allegations is that Westpac Banking Corporation; “failed to 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.”
Each of Westpac Banking Corporation’s alleged contraventions of the AML/CTF Act faces a potential penalty in the millions of dollars.
In June last year ASB’s parent Commonwealth Bank of Australia (CBA) agreed to pay an A$700 million fine to resolve AUSTRAC Federal Court proceedings relating to breaches of AML/CTF laws. After news of that case broke in 2017 the RBNZ quizzed local banks, including ASB, about issues related to their ATMs, which were at the centre of the CBA case.