Why Heads Are Rolling at Another Big Australian Bank

Australia’s scandal-plagued financial industry was set reeling yet again after regulators accused Westpac Banking Corp. of the biggest violation of money-laundering laws in the country’s history. Allegations that some of the transfers went to child pornographers in the Philippines triggered a furor that cost the bank’s chief executive his job and precipitated the chairman’s early departure. An official report in February had lambasted senior banking executives across the industry for tolerating a culture of greed, leading to a litany of misbehavior. Nine months later, the financial crime agency’s court filing sounded a similar note, calling the breaches at Westpac systemic and the result of “indifference by senior management and inadequate oversight by the board.”

The Australian Transaction Reports and Analysis Centre announced a lawsuit on Nov. 20 accusing it of breaching money-laundering laws more than 23 million times. It alleges that between 2013 and 2019, the bank failed to report more than A$11 billion ($7.5 billion) in payments into and out of Australia, mostly using a bank-to-bank system originally designed to help facilitate pension transfers. The most serious allegations relate to a separate consumer product known as LitePay, which is meant to make it easier for people to send small amounts of money to each other. The agency says Westpac failed to carry out proper due diligence on 12 customers whose accounts showed repeated, small payments to Southeast Asia, even though it knew such transactions were a red flag. In one case, a customer transferred money to a person in the Philippines who was later arrested for child trafficking and exploitation involving live streaming of sex involving minors.