The second-largest Australian bank and the one among the Big Four banks, Westpac, is fighting some severe money laundering accusations and is likely to pay one of the heftiest fines in the Australian banking history.
When Westpac collaborated with other leading banks in the country, Australia and New Zealand Banking Group and Commonwealth Bank of Australia, earlier this year, to introduce blockchain to the country’s banking sector and streamline bank guarantee process for shopkeepers, it seemed that the year is going to end on a positive note for the country’s banking industry.
Come December, and everything began to spiral out of control as Westpac was hit by a massive money-laundering scandal which potentially promoted the most atrocious crime – child trafficking. It was the Australian Transaction Reports and Analysis Centre (Austrac) that raised the red flag and filed charges against the banking giant for AML law breaches as many as twenty-three times.
Australian bank Westpac fights serious allegations
After one month, Australia’s banking regulatory body, the Australian Prudential Regulation Authority (APRA), declared on Tuesday that the Sydney-based financial services provider must gear itself up for some prolonged dark days as the regulator has launched a formal probe. The probe will emphasize on the charges alleged by Austrac and determine whether the bank’s top management and directors were involved in breaching Australia’s Banking Act and the Banking Executive Accountability Regime.
The regulatory body will also investigate the potential damage control measures taken by the bank officials if any when the issues were red-flagged. As per the press release, the APRA is determined to track down inefficiencies in the bank’s risk management framework, considering the seriousness of the crime. APRA will bring Westpac and those involved in facilitating these heinous crimes to justice, as deemed appropriate, the report confirms.
Besides the comprehensive inquiry into Westpac’s hazard management practices, APRA will also demand an immediate increase of five hundred million US dollars ($500 million) Westpac’s capital requirements, raising the operational risk profile to around six hundred and eighty-five million US dollars ($685 million). It will also establish whether there had been a failure on bank’s part to oblige to accountability as per Banking Executive Accountability Regime and that the bank failed to comply with the requirements set forth by the prudential standards.
Westpac scandal has made everyone stand up and take notice of the fact that it isn’t only cryptocurrency-related businesses that facilitate money embezzlement. Traditional financial institutions need just as many stricter regulations and administration as the crypto space.
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